The largest dockworkers' strike in 50 years halts 36 U.S. ports.

Dockworkers from all major ports along the East and Gulf coasts of the United States went on strike on Tuesday morning, for the first time in nearly 50 years, after last-minute negotiations between the union and the US Maritime Alliance failed. The strike could have significant repercussions for the world’s largest economy and cause political turbulence just weeks before the presidential election.

The 36 affected ports have a combined capacity to handle up to half of all U.S. trade volume, and the shutdowns immediately disrupt container operations and automobile shipments. Energy supplies and bulk cargo will not be directly affected. Some exceptions will be made to allow the movement of military goods and cruise ships.

The impact of a strike at all the major container ports, from Houston to Miami and New York-New Jersey, depends on how long the strike lasts. According to JPMorgan Chase & Co., the economic loss caused by the stoppage, which began at 12:01 a.m. Eastern Standard Time on Tuesday, will be between $3.8 billion and $4.5 billion per day.

Shipping congestion resulting from a week-long strike would take about a month to resolve, according to Grace Zwemmer of Oxford Economics.

Shares of Denmark’s A.P. Moller-Maersk A/S and Germany’s Hapag-Lloyd AG fell on Tuesday after both container companies posted gains of more than 11% in September.

Potential Shortages

Depending on the strike's duration, it could result in shortages of consumer and industrial goods, which could drive up prices. It could also mark a setback for the economy, which has shown signs of recovery from pandemic-induced supply chain disruptions that triggered a spike in inflation.

The ports involved include the Port of New York and New Jersey, the country's third-largest port by cargo volume. It also includes ports with other specialties.

Port Wilmington in Delaware describes itself as the nation’s top banana port, bringing in a large share of America’s favorite fruit. According to the American Farm Bureau, 1.2 million metric tons of bananas enter through the affected ports, accounting for about a quarter of the country's supply.

Other perishable items, such as cherries, also pass through these ports, as well as a large percentage of imported wine, beer, and distilled spirits. Raw materials used by U.S. food producers, such as cocoa and sugar, also make up a significant portion of the affected imports.

Many non-perishable goods, such as furniture and appliances, are also imported through the affected ports. Retailers have been scrambling in recent months to ensure that imported products they plan to sell during the holiday season are delivered to them before the October 1st strike deadline.

Many of the goods cannot be rerouted because it is neither economically nor logistically feasible to ship them by air or divert them to other ports of entry.

The good news: your holiday shopping may not be as impacted as you fear. Typically, 70% of the products retailers stock for the holidays are already shipped through ports by this time of year. And since the strike has been signaled for months, that percentage is even higher this year.

However, many of these holiday products may sit in warehouses or even in shipping containers for months on end. This is not the case for perishable products flowing through the ports, such as fruits and vegetables, which could be harder to find or more expensive in grocery stores as soon as next week.

Other items, like alcohol, furniture, and certain cars, may have enough stock available for consumers not to notice shortages for a month or more. The U.S. Department of Agriculture said consumers should not expect significant changes in food availability or prices in the short term.

The U.S. Department of Transportation said in a statement on Tuesday that it has been working with shippers, ocean carriers, ports, railways, and other supply chain partners for months to prepare for a potential strike and to help mitigate supply chain bottlenecks.