A container ship at a facility in Bayonne as East Coast Ports may shut down due to a potential … [+]
The economic disasters began Thursday night at 11:10 p.m. when Hurricane Helene made landfall 45 miles east-southeast of Tallahassee, Florida. Initial projections of how much damage the winds, starting at 140 miles an hour, would not contemplate the degree of disaster that swept 800 miles north up the coast.
And all of that is separate from the International Longshoremen’s Association’s plan for strikes at 36 East Coast seaports run by 14 port authorities from Maine to Texas that handle half the cargo volume into and out of the U.S. that travels by ship.
Put both together and there is the very real potential of a force that could send the economy spinning sideways. Not today, but by the holiday season and into next year.
Hurricane Impact
Start with the hell of Helene. It’s difficult to keep pace with the reports of death and destruction. According to AccuWeather as of September 30, 120 people are reported to have been killed during the “once-in-a-generation” storm. The “catastrophic flooding, ferocious winds, and perilous conditions” extend hundreds of miles inland. An estimated 2 million people and businesses remain without power. When the storm was raging most, the number was 4 million, the largest number since Hurricane Irma left 7.6 million customers without power in 2017.
Initially, experts from major reinsurance companies that backstop the insurance industry had predicted the potential of $3 billion to $6 billion in damages before the hurricane landed. Now those numbers seem ludicrously small because no one could have known what would happen.
AccuWeather noted the levels of rain hitting. Atlanta received 11.2 inches in 48 hours, breaking a 138-year record. Some parts of Western North Carolina received more than a staggering 32 inches. The current damage estimates are between $145 billion and $160 billion, making Hurricane Helene “one of the costliest storms in United States history because of the devastating storm surge, damaging winds, and historic flooding.”
Entire communities are largely gone. Big areas no longer have passable roads or bridges. Getting help to those who need it will take a long time just to establish ways of reaching them. And different areas could have outsized impacts on the national economy. Georgia and Tennessee have some of the business shipping and logistics hubs in the country. Delays in getting back to normal could have rippling effects.
Port Shutdowns
As for the port strike, some experts say it is mostly about opposing automation to protect jobs in the future, even though having computers controlling cranes and other heavy equipment will likely happen anyway. According to others like Ron Leibman, a partner at law firm McCarter & English who has been practicing in logistics and supply chain law for 30 years, such typical issues of dues checkoff (employers deducting dues and sending them to the union), wages, and working conditions are likely the bigger issues.
Not that the reason matters to the economy. This would bring enormous import and export volume to a virtual standstill. Mirko Woitzik, global director of intelligence for Everstream Analytics, estimates that each day of a strike would require a week of work to catch up. A strike of one week would keep affecting the economy until after the presidential elections. “General retail goods may be the only category not as affected by a short or medium-term strike action, as many importers anticipated that the strike would move forward and moved up the typical seasonal peak shipping season from September to August to stock inventories for holiday spending upticks,” he says.
But some industries would be hit hard. Pharmaceuticals see 91% of containerized imports and 69% of containerized exports move through the affected ports. More than a third of containers leaving the U.S. with critical medications pass through the Port of Norfolk, VA. Agri-food will be heavily affected as well as automotive manufacturing, so the potential of higher prices.
Container and cargo ships are already waiting off-shore from ports, some delayed from earlier arrival because of Hurricane Helene.
Effects could potentially stretch through the holiday season and into 2025. There are wide estimates of the cost of the economy. The Conference Board pegged the price at $540 million a day. JPMorgan Chase analysts say it would be $5 billion a day, or 6% of GDP, as the New York Times reported.
In short, no one knows the cost, but everyone expects it to be a lot. Put together the storm and port strikes and that’s a lot of economic impact before the holidays and through the election.