America is facing a nightmare scenario with a looming strike and wrecked infrastructure after Hurricane Helene

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Residents waited in line at a gas station in North Augusta, South Carolina, on Sunday. Disruptions could grow if dockworkers go on strike.Artie Walker Jr./Associated Press

A port strike and the effects of Hurricane Helene could slow the US's transport of goods.

The strike, set to start Tuesday, could involve thousands of dockworkers demanding higher wages.

Analysts say the combined disruptions could cost $5 billion a day and worsen inflation.

The US could be entering a hellish period for moving goods around huge swaths of the country.

Hurricane Helene has killed more than 100 people and left devastation across several states, including widespread flood damage that could leave cities like Asheville, North Carolina, without running water for weeks.

The flooding and debris have made many roads and highways across the Southeast impassable, or at least tricky to traverse.

Now a looming port strike could also conspire to slow the transport of critical goods and supplies into, out of, and across the US — and, as a result, deal a blow to the economy.

A strike among dockworkers along the East Coast and the Gulf Coast could start Tuesday. The International Longshoremen's Association said on Sunday that it was prepared to strike on October 1. The nation's largest union of maritime workers is demanding higher wages, among other conditions.

Jon Davis, the chief meteorologist at Everstream Analytics, which focuses on supply-chain risk, told Business Insider that the storm and the strike would have massive "compounding effects."

"It's not one plus one equals two," he said. "One plus one equals a lot more than that."

JPMorgan analysts have estimated that the costs of shutdowns related to the strike could reach $5 billion a day. It would be the first to span a US coast since 1977 and would involve ports that account for about half of the country's ocean shipping. Some 45,000 workers could lay down their metaphorical tools.

On top of the catastrophic damage to infrastructure in hard-hit states like Florida, Georgia, and North Carolina, a strike would undoubtedly slow the movement of critical goods, including food and vehicles.

An inflation driver Any slowdown in the US's critical supply chains could fan inflation at a time when the Federal Reserve has begun to lower its benchmark interest rate to avoid tipping the economy into a recession. Price increases have cooled year over year, though prices remain high for certain goods, like eggs, which are more expensive because of bird flu.

Amir Mousavian, a professor of supply-chain management at the University of New England's College of Business, said that the impact of a strike would depend on how long it lasts but that the consequences would be substantial.

He told BI that perishable goods would be affected almost immediately and that grocery-store shortages could trigger panic buying akin to what unfolded during the pandemic.

Shipping costs could also jump as businesses seek alternate means of getting goods to customers, such as importing and exporting goods on the West Coast.

"The timing of the strike is especially concerning, as the US economy has seen progress in lowering inflation," Mousavian said. "A prolonged strike could reverse these gains, forcing the Federal Reserve to reconsider its economic strategy and possibly reintroduce more restrictive measures."

A supply chain that's not resilient Mousavian said the situation was a reminder of what the pandemic revealed: The US supply chain is "efficient but not resilient," and it needs to be stronger and more adaptable to withstand future crises.

Jason Greer, the president of Greer Consulting and a former agent with the National Labor Relations Board, told BI that the industrial action is likely to happen and that the combination with the hurricane's effects would "be devastating overall."

He said he expects the union will walk out because members feel that their concerns haven't been taken seriously for too long.

"The longshoremen have said: 'We continue to be pushed aside. We continue to be pushed aside. We're not going to be pushed aside any longer.' So I think the overall economic damage is huge," Greer said, highlighting effects like higher grocery prices.

Meantime, Angela Blanchard, Houston's chief recovery and resilience officer, argued on X that the response to and recovery from the hurricane would be "significantly impeded" by a strike. She predicted that disruption at the ports would crimp the availability of materials and fuel — and affect prices.

"This will be a long and complicated recovery season," Blanchard wrote.

Read the original article on Business Insider

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