Time is running out to avert a strike at ports stretching from Maine to Texas, which could disrupt the economy by $5 billion daily and affect holiday plans for millions of Americans.

As the clock strikes midnight, the contract for 45,000 union dockworkers with the United States Maritime Alliance (USMX) will end, prompting the workers to threaten a walkout without a new agreement. If this strike occurs at 36 ports, it will be the first of its kind since 1977. According to the National Association of Manufacturers, these ports handle over 68% of container exports and 56% of container imports in the U.S.

Experts warn that a strike lasting several days could impact consumers, but small and medium-sized businesses, especially farmers, might face immediate challenges due to rising costs and shortages. Small businesses contribute over 40% to economic activity, as noted by the Small Business Administration.

Javier Palomarez, president and CEO of the United States Hispanic Business Council, stated, “The strike could have significant repercussions for the U.S. economy, especially for small businesses. Without a swift resolution, many small firms may confront one of the biggest supply chain disruptions since the COVID-19 pandemic, and many are ill-prepared to handle it.”

Following two years of high inflation, small and medium businesses may struggle more this holiday season with increased shipping expenses and product shortages, experts indicated.

Implications for farmers and agricultural exporters

Approximately 14% of all U.S. agricultural exports transported by water would be impacted, according to the American Farm Bureau Federation (AFBF), which estimates these exports to be worth about $318 million weekly.

The AFBF highlighted that the following products could see significant repercussions:

• Poultry: Around 80% of waterborne poultry exports may be at risk, potentially hurting poultry producers as they lose essential market access. The Port of Savannah is key, as it handles nearly half of the East Coast’s poultry exports, and a decline in exports would also affect feed suppliers relying on corn and soymeal.
• Soybeans: AFBF economist Daniel Munch noted that for soybean producers expecting record harvests, losing this critical outlet is particularly damaging. Regions near Norfolk, Virginia, which processes over 60% of the East Coast’s containerized soybean exports, could face severe effects.
• Hay
• Cotton
• Red meat
• Vegetables
• Dairy products
• Edible nuts

In addition to international markets in countries like China, Vietnam, and Indonesia, 3.2 million residents in Puerto Rico may experience shortages and increased prices. Over 85% of the island’s food supply is sourced from the continental U.S., with 90% of those shipments relying on these ports, as reported by AFBF.

Consequences for small- and medium-sized businesses

The potential strike could be crucial for the survival of some small- and medium-sized businesses, experts warned.

While larger retailers like Walmart and Costco can stock up in advance or divert shipments to the West Coast without too much trouble, smaller businesses typically lack such flexibility.

Consequently, “some businesses might completely miss out on essential holiday supplies,” said Ben Johnston, COO at the small business lender Kapitus. “Given the slim margins for most small manufacturers, retailers, and wholesalers, a strike of this nature could determine whether they turn a profit or incur a loss this year.”

Key sectors like retail, manufacturing, food and agriculture, and pharmaceuticals are expected to suffer greatly from supply chain disruptions, Palomarez commented.

Implications for consumers

Consumers might encounter higher prices and shortages yet again, according to some analysts.

Eric Clark, a portfolio manager at Accuvest Global Advisors, remarked, “If a strike extends beyond one week, it could lead to product shortages over the holiday season. We might see inflation levels for the next six months that resemble or exceed the peak inflation we encountered a year ago.”

Moreover, as the labor market cools, Americans could face job cuts and furloughs, as pointed out by retail experts. Companies that rely on low stock levels to minimize costs might suffer from parts shortages. If this scenario occurs, “assembly lines could shut down,” warned Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.

Firms that prepare ahead may be better equipped to handle any extended disruptions, according to Dave Charest, who is the director of small business success at the marketing company Constant Contact.

“More than 40% of small businesses delay holiday planning until October, but those who proactively engage with their customers and stock up on inventory are in a better position for success,” Charest stated.

Nevertheless, small business owners continue to express concerns.

According to Bill Dunkelberg, chief economist at the National Federation of Independent Businesses, “the sentiment on Main Street deteriorated in August.” He noted that “historically high inflation remains the primary concern for business owners as sales forecasts drop and cost pressures rise” in a recent announcement.