Friday, June 27, 2014

Study: Port Shutdowns Could Cost Billions Daily

By Mark Edward Nero

A new study shows the US economy could lose as much as $2.5 billion a day if a prolonged shutdown of West Coast ports occurs as a result of failed labor contract negotiations.

The study, conducted by the National Association of Manufacturers (NAM) and the National Retail Federation (NRF) by economists at the Interindustry Forecasting Project at the University of Maryland, found that the economic repercussions of a port closure would grow with time.

“A protracted dispute between the negotiating parties could lead to reduced or shuttered terminal operations for an extended period,” the study, which was released June 26, warned. “If such disruptions occur, the economic impact would be significant and widespread.”

According to the study, a five-day stoppage would reduce gross domestic product by $1.9 billion a day; disrupt 73,000 jobs; and cost the average household $81 in purchasing power.

A 10-day stoppage, the study concludes, would reduce GDP by $2.1 billion a day; disrupt 169,000 jobs; and cost the average household $170 in purchasing power.

A 20-day stoppage would reduce GDP $2.5 billion a day; disrupt 405,000 jobs; and cost the average household $366 in purchasing power, according to the study.

“It is important for the parties at the table as well as others to fully understand the economic consequences of a port disruption,” NRF President/CEO Matthew Shay said. “Any supply chain disruption, whether it’s a port slowdown or outright stoppage, would cripple international trade.”

Negotiations began in mid-May between Pacific Maritime Association and International Longshore & Warehouse Union for a new contract agreement covering 13,600 dockworkers at 30 ports stretching from Southern California to Northern Washington state.

The current six-year contract’s set to expire June 30, but neither side has indicated that a new deal is imminent. The last major West Coast port disruption occurred in 2002, when management locked out dockworkers for 10 days until then-President George W. Bush ordered the two sides back to work under the Taft-Hartley Act. That shutdown was estimated to have cost the US economy several billion dollars.