Another potential port strike and looming tariff increases threaten to disrupt U.S. supply chains. This is forcing retailers and shippers into preemptive action. Contract negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have stalled, with their current extension set to expire on Jan. 15, 2025. That is just days before President-elect Donald Trump takes office.

The standoff centers on automation, which the ILA opposes, fearing job losses. USMX’s push for semi-automated equipment sparked a breakdown in talks, with ILA President Harold Daggett rejecting the proposal. The impasse worsens amid U.S. ports’ ongoing inefficiency issues, with reports from the World Bank and S&P Global Market Intelligence ranking them among the least efficient globally. Ports like Los Angeles and Long Beach continue to struggle with outdated practices, leading to delays and hindering global competitiveness.

Businesses act quickly to offset potential disruptions. Container volumes surged in December, with U.S. ports handling 2.25 million TEUs, a 9.3% increase year-over-year. Retailers front load shipments, trying to avoid delays as import volumes spike by 14.3% compared to the previous year, according to Hackett Associates.

Economic Impact and Tariff Concerns

The National Retail Federation (NRF) has raised alarms about the economic fallout of strikes or tariffs. “Either would be a blow to the economy,” said Jonathan Gold, NRF’s vice president for supply chain and customs policy. The NRF urges both sides to return to negotiations and calls on policymakers to be cautious with tariffs. This could exacerbate inflation and increase consumer costs.

With businesses already adapting by increasing shipments, port projections for January 2025 show continued growth, with 2.2 million TEUs expected to be handled. The stakes rise as labor and management face a critical crossroads. Therefore, the next few weeks will determine whether a resolution is achievable or if port disruptions will further strain the economy.

As the deadline approaches, the uncertainty surrounding port operations continues to grow, leaving retailers, shippers, and the U.S. economy on edge. Will the two sides reach a deal, or will the tension lead to another costly strike? Only time will tell.