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Construction Projects at Risk from US Port Shutdowns
FILE PHOTO: Shipping containers are stacked on a pier at the Red Hook Terminal in Brooklyn, New York, U.S., September 20, 2024. REUTERS/Brendan McDermid/File Photo
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Construction Projects at Risk from US Port Shutdowns

A recent strike by tens of thousands of dockworkers at major U.S. ports has triggered concerns about potential delays. The strike created delays in business processes and in construction industry projects. The first major disruption in almost 50 years has been caused by the International Longshoremen’s Association (ILA). ILA members are going on strike at 14 important ports along the East and Gulf coastlines. Heavy machinery and building supplies are among the many commodities that these ports are essential entry routes for, therefore the strike poses a serious danger to the industry.

The shutdown of a major coastline creates a chaotic situation among the transportation networks they face severe consequences. Also, the current administration of the U.S. is not in full motion to cater to the issue. It further created frustration and also delayed the disruption in the area. 

The effects are extensive, particularly for businesses looking to buy essential equipment such as a heavy wheel loader for sale, as the port shutdown leads to bottlenecks in the supply chain.

The main reason behind the strike

At the center of this disruption is a labor contract dispute between the ILA and USMX that has spanned six years. The case relates to about 25,000 employees dealing with containerized and roll-on, roll-off cargoes, which are an important aspect of ports. USMX consists of shipping companies, port associations, and marine terminal operators that want contract terms the ILA believes neglect its members. 

These “international ocean carriers” significantly contribute a billion dollars to their profits, according to ILA President Harold Daggett, but fail to fairly pay the American dockworkers who make such profits possible.

According to Daggett, “USMX imposed this strike since they insisted on foreign-owned ocean carriers earning hundred million dollar profits whilst bypassing the ILA longshoremen who work hard to provide their companies with their fortunes.” The strike goes to the bargain on how employees view profit sharing and wages, especially in an industry that recently recorded its highest profits ever.

The economic impact of the strike

The construction sector is particularly vulnerable to the delays that are caused by this strike. U.S. ports play an essential part in the importation of heavy machinery and other necessary equipment, as well as building supplies including steel, lumber, and cement. A protracted strike may cause the supply chain to experience major delays, which would raise project costs and lengthen schedules.

According to the Wall Street Journal, the impacted ports serve as important entry points for goods needed by a number of businesses, notably the building sector. Specifically, a lot of construction companies depend on these ports. They bring in equipment and supplies that are hard for them to arrive in the country. Project progress could be severely impacted by the delay in getting these materials. Particularly for large-scale infrastructure projects that require a consistent supply of resources.

According to Grace Zemmer, an associate US economist at Oxford Economics, the strike may impact more than a third of exports and imports, affecting US economic growth by at least $4.5 billion every week of the strike. Other estimates suggest the economic damage could be even greater.

How could this affect the election?

The strike by the International Longshoremen’s Association (ILA) was the first since 1977. The current strike deepened the uncertainty in the US economy, just six weeks before the election. As the economy slows down and unemployment increases, the strike is slightly awkward for President Biden.

Presidents may step in to prevent strikes that become a threat to security. Also, they ask the employees to go back to work for 80 days as they negotiate. The U.S. Chamber of Commerce has called on Biden to act, arguing that new restrictions. This may lead to supply chain disruptions, as happened with Covid.

Despite securing the ILA’s endorsement during the 2020 presidential election, Harold Daggett has recently criticized Biden and even met with Donald Trump. If Biden does something against the strike, this may alienate workers’ unions and the Democratic party will be shot in the election. Nonetheless, Rutgers professor William Brucher propounds that the strike might force the employers to come up with a better offer rather than have an impact on the social opinion or the dockworkers.

Current administration intervention 

President Biden faces a difficult decision: whether to intervene in the strike using the Taft-Hartley Act or to allow the dispute to play out and risk deeper economic disruptions. His administration has already made significant investments in infrastructure through the Bipartisan Infrastructure Law. The law aims to modernize America’s roads, bridges, ports, and public transit systems. 

Construction delays caused by port shutdowns could jeopardize these high-profile projects. It’s impacting not just construction companies but also local economies and the overall pace of infrastructure improvement.

Construction delays and cost increases

One of the most immediate consequences of the strike could be delays in ongoing construction projects. Particularly those dependent on imported materials and imported heavy equipment. Timelines for construction projects are frequently limited and they depend on a continuous supply of materials. Projects could have extended interruptions if supplies like steel or cement are delayed at ports. This is requiring contractors to reschedule and perhaps delaying project completion dates.

Another critical issue is the potential for rising costs. When supply chains face disruptions, the law of supply and demand takes effect. When there are fewer materials on the market, prices may rise, increasing the cost of building projects.

It could be necessary for contractors to charge their clients these additional costs. Which could be particularly difficult for taxpayer-funded public infrastructure projects. Overspending on projects could become a major problem if they are already running on narrow margins.

Conclusion

The construction industry is already dealing with severe supply chain issues and rising prices. The U.S. port blockade puts it in danger. Import delays might hinder the progress in important manufacturing, clean energy, and infrastructure projects. Increasing costs and delaying deadlines for projects.

Industry leaders are encouraging President Biden to utilize the Taft-Hartley Act to temporarily halt the strike. As negotiations continue, the government may need to intervene to prevent greater economic damage. With so much at stake, including the success of significant infrastructure expenditures, the following weeks will be critical. Both the dockworkers and the companies depending on their labor.