The Window is Closing on Tomorrow’s Impending Port Strike – Is Your Portfolio Positioned Properly?

If union members and port authorities can not come to an agreement on a new contract by tomorrow, strikes along the East Coast and Gulf ports are to be expected which are estimated to affect the US economy $3Bn to $4Bn per day, according to analysts. These ports account for roughly half of all imports and exports for the US. Oxford Economics has also predicted that for each week the strike continues it would take a month to clear the backlog which in part is due to West Coast ports that are already starting to reach capacity. The prolonged strike is expected to affect approximately three dozen ports as roughly 45,000 workers walk out which, could lead to shortages and price increases as no signs of progress have been made between the International Longshoremen’s Association and an alliance representing ports and shippers. In addition to its impact on the economy, America has found itself in a crisis as Hurricane Helene has decimated parts of the Southeast leaving many displaced and without essentials. As aid is needed, supplies may become harder to obtain to assist those in need.

While the port strike is expected to disrupt many industries, there are also some who may potentially gain. PRISM MarketView takes an inside look at some potential expectations for a port strike.

Packaged Foods and Meats

When it comes to the types of foods that consumers can expect to see shortages of, the Department of Agriculture states that the US food system is most reliant on imports related to sweeteners and processed sugars therefore good containing these ingredients may likely see increase in pricing. Avocados, bananas and grapes are referenced as the most common types of produce imported to the US that represent about 41% of all fruit and vegetable imports. Dole Corporation (DOLE) is expected to encounter disruption as it is the number one supplier of bananas in North America with approximately 75% of its imports coming through the Delaware River Port.

Retailers

Should an agreement be prolonged, this strike has the high potential of impacting the upcoming holiday season as the fourth quarter is typically the highest for consumer spend. The ports that will be affected also account for half of all knitted and non-knitted retail apparel. One retailer in particular that is likely to face impacts from this is Nike (NKE) whose primary port is the Pacific Northwest but is a port that is already facing congestion. Meanwhile others have tried to plan ahead as Costco’s (COST) CEO Ron Vachris stated, “We’ve cleared the ports, we’ve pre-shipped. We’ve done several different things that we could to get holiday goods in ahead of this time frame, and looked at alternate plans that we could execute with moving goods to different ports and coming across the country if needed.”

Transport

The potential for some tailwinds related to the strike could potentially be seen in the marine transport industry. While freight volumes will be impacted, shippers may end up utilizing inland waterways to move cargo. Kirby Corporation (KEX) is headquartered in Houston, Texas and is the largest tank barge operator in the US, transporting bulk liquid products throughout the Mississippi River System. Additionally, Fedex (FDX) and United Parcel Service (UPS) will likely benefit in addition to freight-forwarding intermediaries including Expeditors International Of Washington (EXPD) and C.H. Robinson Worldwide (CHRW) who should expect higher volumes. As it relates to railways, who handle the cargo once unloaded, they will likely see headwinds from the port strike in addition to impacts from Hurricane Helene.