The Breaker Times

A massive dockworker strike at seaports on the U.S. East and Gulf coasts is expected to wreak havoc on global supply chains and the economy, with American consumers likely to notice shortages of popular products if the work stoppage lasts for a long time.

Workers at ports stretching from Maine to Texas went on strike early Tuesday in a dispute over wages and automation. The action, which is likely to have severe consequences on ships carrying billions of dollars of cargo, is the first by the International Longshoremen’s Association (ILA) union in nearly half a century.

The ILA, which represents about 45,000 port workers, made good on its threat to strike at 14 major ports after talks broke down with the United States Maritime Alliance (USMX) employer group ahead of a Sept. 30 deadline.

“The top line takeaway here is duration amplifies impact,” Lisa DeNight, managing director of national industrial research at Newmark, told CNBC’s “The Exchange” on Monday.

“If this strike goes on for a couple of days the implications are, well, rather short-lived, I’d say. If this drags on, it has cascading impacts throughout the global economy — not just the U.S. economy. So, the unpredictability of this issue here is really in play and it has the magnitude to really throw a giant wrench in global supply chains,” she added.

DeNight said that even a minor disruption of just a couple of days could have “really significant implications for certain industries,” including pharmaceuticals, auto and manufacturing.

Ocean supply chains have already been hit hard this year by conflict in the Red Sea, a lengthy drought affecting the Panama Canal and the Baltimore bridge collapse.

Even so, Peter Sand, chief analyst at ocean freight rate intelligence platform Xeneta, has said that given more than 40% of total “containerized goods” enter the U.S. via ports on the East and Gulf Coast, “the stakes could not be higher.”

Speaking to CNBC’s “Street Signs Europe” on Tuesday, Sand said he expects the strike to last for one week.

“We see the dominos fall in multiple stages now. At first, of course, the immediate effect is on the U.S. East and Gulf Coast, right?” Sand said.

There will then be a knock-on effect for vessels currently queuing outside the ports, he added, meaning their next journeys to the U.S. with new goods will be delayed.

“We will see disruption with some ships being late out of Europe and the Mediterranean towards the end of October and early November,” Sand said.

The ships will be delayed leaving Asia toward the end of December and early January — “and that’s basically when the next normal mini-peak in container shipping happens in the lead up to Chinese New Year.”

“So, it’s really crunch time with so many things at stake now. You might say it is a perfect storm, but it is also a really good negotiating position for those people wanting a strike,” Sand said.

For American consumers, he said the strikes could soon result in shortages of perishable or temperature-controlled goods, such as bananas and other fresh fruit.

Danish shipping giant Maersk has warned that just a one-week shutdown could take four to six weeks to recover from, “with significant backlogs and delays compounding with each passing day.”

In an update published Monday, Maersk said the disruption would likely lead to delays in cargo movement, increased costs and logistical challenges for firms relying on U.S. East Coast and Gulf ports. A lengthy labor dispute, the firm added, may exacerbate these disruptions.

Not everyone is as concerned about the broader economic ramifications of the U.S. port strikes, however.

Bradley Saunders, North America Economist at Capital Economics, said in a research note published late last month that the strike action was unlikely to trigger any major economic disruption because — despite denials ahead of time — U.S. President Joe Biden would have “little choice” but to intervene and invoke back-to-work legislation ahead of the November election.

Biden has said that he will not use existing labor law to force union workers back on the job, which is within his powers under the Taft-Hartley Act.

Passed in 1947, the Taft-Hartley Act was a revision of U.S. law governing labor relations and union activity that granted a U.S. president the power to suspend a strike for an 80-day “cooling off period” in cases where “national health or safety” are at risk.

“Frequent shocks to supply chains in recent years have left producers more attuned to the risks of running low inventories,” Saunders said on Sept. 25.

“It is therefore likely that firms will have taken precautionary measures in case of a strike – not least because the possibility has been touted by the ILA for months,” he added.

— CNBC’s Lori Ann LaRocco contributed to this report.