7 things to know about the American dockers' strike and its effects on the economy

NEW YORK (AP) U.S. ports from Maine to Texas closed this week as the union representing about 45,000 dockworkers went on strike for the first time since 1977.

Workers began marching on picket lines early Tuesday near ports throughout the Eastern and Gulf coasts.

A shutdown that lasts more than a few weeks risks driving up prices and creating shortages of goods across the country as the holiday shopping season and a close presidential election approach.

WATCH: What's Behind the Dockworkers' Strike and What It Means for U.S. Consumers

There have been some signs of progress in negotiations, with the American Maritime Alliance, which represents ports and shipping companies, saying both sides have backed away from their initial wage offers. But on Wednesday, the alliance called on the International Longshore Union to come to the negotiating table. We cannot agree to preconditions to resume negotiations, but we remain committed to negotiating in good faith, the group said in a statement.

On Wednesday evening, the ILA said Harold Daggett, its president, and other union leaders had received death threats since the strike began. The union said the threats were reported to the police.

President Joe Biden told reporters Thursday that he believes progress is being made to end the strike. When asked how much, Biden said: We'll find out soon.

What are the stakes of the dockers' strike?

The union is demanding significantly higher wages and a complete ban on automation of cranes, gates and container-moving trucks used for loading or unloading goods at 36 U.S. ports. These ports handle about half of the goods shipped by the country's ships.

The contract between ILA and the United States Maritime Alliance, which represents the ports, expired Tuesday.

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The unions' initial demand was a 77 per cent pay rise over the six years of the contract, with Daggett saying this would offset inflation and years of small increases. ILA members earn a base salary of about $81,000 a year, but some can earn more than $200,000 a year with lots of overtime.

On Monday, before workers hit the picket lines, the alliance said it had increased its offer to 50 percent over six years and pledged to maintain limits on automation of the old contract. The alliance also said its offer tripled employer contributions to retirement plans and strengthened health care options.

Which ports are affected?

While any port can handle any type of cargo, some ports specialize in handling cargo for a particular industry. Ports affected by the closure include Baltimore and Brunswick, Georgia, the two busiest automobile ports; Philadelphia, which prioritizes fruits and vegetables; and New Orleans, which processes coffee, primarily from South America and Southeast Asia, various chemicals from Mexico and Northern Europe, and wood products from Asia and South America.

Other major ports affected include Boston; New York/New Jersey; Norfolk, Virginia; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Florida; Mobile, Ala.; and Houston.

Can the government intervene?

If a strike were deemed a danger to the economic health of the United States, President Joe Biden could, under the Taft-Hartley Act of 1947, seek a court order for an 80-day cooling-off period. This would suspend the strike.

But in an exchange with reporters Sunday, Biden said no when asked if he planned to intervene.

Because it's about collective bargaining, I don't believe in Taft-Hartley, Biden said.

What impact will this have on consumers?

If the strike is resolved within a few weeks, consumers likely won't notice a shortage or significant price increase. But a work stoppage that lasts more than a month might be a different story, depending on what you're looking for. Most Christmas goods have already arrived from abroad, so there is a buffer. Prices of everything from fruits and vegetables to cars could rise, at least temporarily, if the situation continues.

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That would be bad news after clogged supply chains drove up prices at the end of the pandemic, and could be potentially politically damaging about a month before Election Day.

The sales clock never stops

Containers full of highly perishable bananas are stuck at some ports and Agriculture Secretary Tom Vilsack told reporters Thursday that it would be difficult to get them back because of the strike. Biden urged shipping companies in particular to make more of an effort to resolve the dispute, he said.

It's the most efficient way to get bananas where they need to go. And I hope the shippers will come to the table, Vilsack said. The union will come to the table. Collective bargaining will work and will allow us to resolve this problem quickly.

Limiting the duration of this strike is the key to avoiding shortages and rising prices, Vilsack said.

Our assessment is that if this lasts a few weeks, we are not talking about a significant disruption, he said. If you arrive in months, the situation is obviously different.

Businesses develop contingency plans

Since the major supply chain disruption of 2021, retailers have adapted to supply chain disruptors becoming the new normal, said Rick Haase, owner of a mini-chain of gift shops Skated in and around the Twin Cities of Minnesota.

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The best approach for Patina has been to secure orders as early as possible and keep merchandise in our warehouse and backrooms to ensure we are in stock for key products, Haase said.

However, holding on to these goods longer may have an inflationary impact at the checkout level, as retailers will have to recoup or absorb these storage costs.

Jay Foreman, CEO of Basic Fun, a Boca Raton, Fla., company that makes Care Bears and Lincoln Logs, has already moved all of the toy company's container shipments from the East Coast to West Coast ports , mainly Los Angeles and Long Beach. This too has a cost.

This maneuver added between 10 and 20 percent more costs that his company will have to absorb, because Basic Funs prices for the next 10 months are locked in at retailers. But Foreman would consider raising prices in the second half of 2025 if the strike continues.

Daniel Vasquez, owner of import-export company Dynamic Auto Movers in Miami, has been increasing his inventory, especially for vehicles that take longer to ship, in anticipation of a strike.

It, too, has moved away from relying on a single port or shipping partner and has expanded its relationships with smaller ports and shipping lines that can bypass congested areas.

How will a strike impact holiday shopping?

Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, the nation's largest retail trade group, said the strike comes as the supply network is already struggling to the challenges of Houthi attacks on commercial shipping that essentially ended the use of red. Sea and Suez Canal.

The growing supply chain uncertainty comes at the height of the holiday shipping season for retailers, which traditionally runs from July to early November. Many large retailers, anticipating a strike, began shipping goods to U.S. distribution centers in June, and Gold said the majority of those products were already in the United States.

However, on top of the cost of storing goods longer, retailers will struggle to replenish their stocks if the strike drags on, and as Gold pointed out, carriers are already announcing surcharges on containers shipped due to disruptions potential.

Toy makers had already diverted many shipments through Los Angeles in anticipation of a strike and inventories in stores are currently healthy, said Greg Ahearn, who heads the Toy Association, the nation's leading toy trade group. He said Wednesday the strike was becoming more problematic over time, particularly in meeting demand for popular toys in the run-up to Christmas.

Up to 60 percent of toy companies' annual sales occur in the current quarter, Ahearn said.

The longer this goes on, the more likely it is that the toys parents and guardians want for their children will be in short supply, and with scarcity comes the potential for higher prices, he said.

AP writers Tom Krisher, Stephen Groves and Colleen Long contributed to this report.

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