A port strike could have severe consequences for consumers, according to an expert.

• The dockworker strike could have "dire effects on American workers, their families, and local communities," as stated by Matthew Shay, president and CEO of the National Retail Federation.
• Experts predict that a supply-and-demand logistics crisis will occur four years after the pandemic, leading to an increase in prices for some consumer staples.
• Grocery prices may be hit first.

The strike of dockworkers at seaports on the U.S. East and Gulf coasts is predicted to cause significant issues for global supply chains and the economy, with American consumers likely bearing the brunt of the consequences.

On Tuesday, the International Longshoremen's Association (ILA) initiated a strike at 14 major ports across the United States, demanding higher wages and a halt on the use of automation. The ports facing strikes handle a combined annual trade volume of $3 trillion, as per an analysis by The Conference Board.

The National Retail Federation's president and CEO, Matthew Shay, stated on Tuesday that a significant disruption during this critical economic recovery period would have disastrous consequences for American workers, their families, and local communities. As the retail industry's largest trade association, supply chain dynamics are a crucial concern, particularly ahead of the peak holiday season.

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The strike at American ports will lead to higher prices for consumers due to limited supplies and increased demand for imported goods, according to Shay.

The strike, which has been going on for more than two years, will cause additional difficulties due to inflationary pressures and the aftermath of Hurricane Helene.

U.S. port strike could cause inflation

Although the U.S. economy has made progress in reducing inflation, prices are generally only slowing down, rather than decreasing significantly.

The consumer price index, which measures average prices of a broad basket of consumer goods and services, decreased by 2.5% in August compared to the same month a year ago, according to the Bureau of Labor Statistics. This is a significant decrease from the pandemic-era high of 9.1% recorded in June 2022.

ITR Economics economist Lauren Saidel-Baker states that the cost of goods has been well-controlled due to stable commodity prices and lower shipping costs, at least until recently.

The port strike could lead to a resurgence of inflation on the goods side, according to her.

The conflict between the ILA and USMX, representing approximately 45,000 port workers and 12,500 mariners respectively, has been ongoing for nearly four years since the Covid pandemic disrupted global supply chains.

At the time, consumers wanted goods to hit the shelves faster, which led to an increase in prices.

Saidel-Baker stated that the U.S. port strikes could result in a logistics crisis similar to the one experienced during the pandemic.

The strike may result in pricing consequences, with inflationary impacts becoming more likely as time goes on.

Strike's duration will determine the impact

Lisa DeNight, managing director of national industrial research at Newmark, stated on CNBC's "The Exchange" on Monday that the length of time something lasts can increase its impact.

Perishable goods will be affected almost immediately in a short-term strike, while companies with safety stocks may buffer initial disruptions, according to Amir Mousavian, professor of supply chain management at the University of New England's College of Business.

Some grocery prices, such as imported coffee, bananas, and frozen food, would be the first to increase.

Mousavian stated that they have a low reserve due to their short shelf life.

If the strike continues, businesses may have to find new shipping routes, which could increase costs and lead to higher prices for various goods, including pharmaceuticals, clothing, and automobiles, according to Mousavian.

If it continues to drag on, it will affect multiple sectors and make it difficult for most businesses to avoid.

He stated that the consumer ends up paying the ultimate price.

The timing of the strike is particularly concerning, as it falls ahead of the holiday shopping season and the U.S. presidential election, and immediately following the Federal Reserve's first rate cut in four years, which provided relief for Americans facing high living costs.

If a prolonged strike occurs, it could undo these gains, prompting the Federal Reserve to reevaluate its economic strategy and potentially implement stricter measures, according to Mousavian.