Port Strike Could Cost Billions

The East Coast and Gulf dockworkers strike has the potential to do great harm to the US economy.

Inflation could be stimulated again just when it was coming to heel, and some of the union demands could keep efficiencies from being implemented, putting US ports behind those of even some second- and third-world ports for efficiency.

The Illinois Farm Policy News quoted Oxford Economics analysts saying the strike could cut economic activity by $4.5 billion to $7.5 billion every week it continues.

 

WHAT IS BEING SOUGHT

 

The contract between the ports and about 25,000 members of the International Longshoremen’s Association and the United States Maritime Alliance expired at midnight Monday, and the unions walked off the jobs a minute later.  News reports say 36 ports are affected.

The shutdowns are a big deal because, as CBS News reported, more than 68% of all containerized US exports and about 56% of containerized imports come through these ports.

Seeking Alpha reported the ILA wanted better wages and job security as automation continued to increase.

Basically, they wanted humans to do various jobs rather than laser-guided, computer-controlled large robots, like to loading and unloading containers.

 

WHAT CAN BE AFFECTED

 

Illinois Farm Policy News quoted AgWeb’s Jim Wiesenmeyer saying the strike “would not significantly impact grain export facilities.”  Many of the bulk grain facilities operate with different labor arrangements.

However, “while bulk grain exports would be largely unaffected, the strike would impact containerized agricultural exports: soybeans, soybean meal and other agricultural products exports via containers would be affected,” Wiesenmeyer was quoted as saying.

But there could be other effects on US agricultural exports.  The strike could affect chilled or frozen meat shipments, as well as other livestock products, that normally are shipped in containers.  Wiesenmeyer said East Coast and Gulf ports accounted for 44% of US waterborne pork exports and 29% of waterborne beef exports in the first half of this year.”

Seeking Alpha said the ripple effects of the strike could be felt widely as supplies are cut off.  Packaged foods and meats, specifically bananas, could be hit hard.

Autos and auto parts could show some major disruptions, especially since US automakers are still reeling from last year’s UAW strike.

Retail stores could be hit hard as clothing shipments wouldn’t be available in time for Christmas shopping.

And, there could be pileups at West Coast ports as shippers reroute some East Coast or Gulf shipments, disrupting and overloading the normal flow of goods from there to their destinations.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $1854.65 per cwt to $186.49, compared with last week’s range of $182.95 to $185.78 per cwt.  FOB dressed steers, and heifers went for $288.63 per cwt to $297.85, compared with $285.83 to $292.69.

The USDA choice cutout Tuesday was up $2.09 per cwt at $300.17 while select was up $0.77 at $285.30.  The choice/select spread widened to $14.87 from $13.55 with 115 loads of fabricated product and 28 loads of trimmings and grinds sold into the spot market.

The USDA-listed weighted average wholesale price for fresh 90% lean beef was $359.50 per cwt, and 50% beef was $70.90.

The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.28 to $1.40 a bushel over the Dec corn contract, which settled at $4.29 a bushel, up $0.04 1/4.

The CME Feeder Cattle Index for the seven days ended Monday was $247.43 per cwt, up $0.19.  This compares with Tuesday’s Oct contract settlement of $246.15, down $0.05.