US retailers are preparing for the possible consequences of a longshoremen's strike

With a threatened dock workers' strike Close ports Chris Butler, who is traveling the East and Gulf Coasts starting this week, is becoming increasingly concerned.

Butler is CEO of the National Tree Company and, like many other companies, he expects shipments to be on the way from Asia but not reach their ports earlier than expected Dock workers strike Starting Tuesday at 12:01 a.m. Eastern Time.

The New Jersey-based company is an importer of artificial material Christmas Trees and other holiday decorations. If a strike only lasted a few days, there might still be time after that to unload the trees, transport them to warehouses and have them ready for customers this season.

However, if a strike kept ports closed until, say, November, about 150,000 trees might not arrive in time for the peak shopping season, at a cost to National Tree and other companies. In a worst-case scenario, these costs, multiplied across industries, could fuel inflation and put pressure on the U.S. economy.

“Definitely not an ideal situation,” Butler said.

National Tree has already stored or delivered most of the approximately 2 million artificial trees it sells each year. But it would lose revenue if 150,000 trees got stuck in the pipeline.

Other companies face the same predicament: Goods could be stranded at sea if 45,000 members of the International Longshoremen's Association carry out their strike threat. They could close 36 ports from Maine to Texas that handle about half the goods shipped to and from the United States. (West Coast dockworkers belong to a different union and are not involved in the strike.)

A prolonged strike would force companies to pay shippers for the delays, and goods could arrive late for the peak of the holiday shopping season. On Friday, senior Biden administration officials met with port operators and told them to negotiate with the union before Tuesday, according to a White House official who insisted on anonymity to discuss an ongoing meeting.

Butler says he hopes for an agreement or government intervention to stop a strike. But the US Maritime Alliance, which represents shippers and ports, and the longshoremen's union Haven't met since June. And no talks are planned until their contact ends late Monday.

“The unity of the ILA remains strong and growing,” James McNamara, spokesman for the International Longshoremen's Association, said in a statement Sunday. He said the union would update the public on any new developments by 11 a.m. Monday.

The union is calling for significantly higher wages and a complete ban on the automation of cranes, gates and moving containers when loading and unloading goods.

The Toy Association, the nation's leading toy trade group, was among about 200 organizations that wrote a letter to President Joe Biden this month asking him to work with both sides to reach an agreement. The National Grain and Feed Association also called on Biden to take action to avert a strike that would come just as the harvest season begins.

Their move has put Biden and Vice President Kamala Harris, the Democratic presidential nominee, in a tricky position: Both have sought the support of unions and do not want to appear as if they are pressuring longshoremen to reach a deal. However, if a widespread strike leads to a shortage of consumer goods or fuels high inflation, it could cost Harris votes in the November election.

Under the Taft-Hartley Act, Biden could seek a court order suspending the strike for an 80-day cooling-off period. Robyn Patterson, a White House spokeswoman, said in a statement that the administration has never invoked the law and is not currently considering it.

Biden and Congress did it get in two years ago to head off a threatened freight strike and force workers to accept a deal as fears of a strike were widespread would have damaged the economy.

Alex Hertel-Fernandez, an associate professor of international and public affairs at Columbia University who served as a Labor Department official under Biden, suggested that the administration would follow the template it set last year in talks between the ports at the West Coast and the union there: mediation negotiations without direct intervention.

Greg Ahearn, CEO of the Toy Association, said a strike would come at a critical time for toy sellers and manufacturers: up to 60% of annual sales come from October to December. Although some toy companies previously shipped goods, Ahearn said a strike would make it difficult to restock hot-selling items.

He warned that a strike could drive up toy prices “due to shortages and higher costs.”

At the National Tree, Butler and his crew began preparing for a strike in July. They expedited deliveries as much as they could. But a large retail customer asked for trees early on, he said. And until recently, factories in China and elsewhere were unable to produce National Tree's remaining orders.

Ships carrying the trees are on their way to New York, but won't get there until Tuesday. A prolonged strike, Butler said, would result in most trees having to be stored until next Christmas.

A dock workers' strike would further distress a global supply chain that has already suffered slowdowns from attacks on commercial shipping by Yemen's Houthi rebels. Those attacks have brought use of the Red Sea and Suez Canal to a near standstill, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. The attacks are forcing longer transit times for ships having to sail around the Cape of Good Hope to reach ports on the East and Gulf coasts.

A longshoremen's strike, Gold said, could prove even more damaging than the pandemic-related congestion at ports in 2021 and 2022, when cargo was allowed to move, albeit slowly.

The eastern ports could come to a standstill. Gold noted that shipping companies are already announcing surcharges on containers to address potential disruptions, a trend that could drive up inflation.

Many retailers may find it difficult to charge customers more to offset these costs. Most at risk, Gold said, would be small businesses that do not import directly and lack the financial resources to absorb higher costs.

Shippers could redirect some of their cargo to ports on the West Coast. But those ports couldn't come close to accommodating the additional cargo. The Port of Los Angeles, for example, handled 960,000 containers in August – about 80% of its capacity – said Gene Seroka, its chief executive.

Major Western railroads Union Pacific and BNSF have increased the capacity of their systems to handle more freight as imports rise. Eastern Railroads CSX and Norfolk Southern say they can shift cars and crews to handle more freight coming into Chicago from the west. However, it is not clear how much more the railways can do.

In any case, Butler said, it would be too costly for him to transport trees across the country by rail.

Taylor Green, co-founder of Los Angeles landscaping company Artificial Grass Solutions, which imports artificial turf, said he bought 25% more turf than usual to ensure there was enough for customers' projects. He also made arrangements with alternative suppliers in case the strike lasted indefinitely. If that were the case, Green said price increases would likely be necessary.

Still, Artificial Grass, like some larger retailers and manufacturers, says it is better prepared for shortages than it was during the pandemic.

“We learned to be proactive instead of reactive,” Green said.

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Associated Press writers Anne D'Innocenzio, Mae Anderson and Cathy Bussewitz in New York, Josh Boak in Washington and Josh Funk in Omaha, Nebraska, contributed to this report.