Economy

Inflation Could Jump Due to Port Workers Strike

Douglas A. McIntyre

Published: July 2, 2023 2:23 pm

Last Updated: July 3, 2023 8:06 am

The members of the International Longshore & Warehouse Union Canada’s Longshore Division say they will go out on strike. This affects several ports in Western Canada, particularly Vancouver and Prince Rupert, Other strikes have been threatened at US West Coast ports. So far, those have been averted. However, strikes that shutter large ports trigger supply chain problems like those during the worst part of the COVID-19 pandemic. The consequence is a lack of supply of critical imports is inflation.

Some shippers turn from ships to trucks, which creates another severe problem. Paul Brashire, vice president of drayage and intermodal at ITS Logistics told CNBC, “If this strike continues into the middle of next week, it will impact congestion in the coming weeks at Chicago and Detroit rail terminals because of the amount of containers that would have built up and eventually moved to those rail terminals.”

Inflation in the US has been partially tamed in the last several months. The CPI, year over year, was approximately 8% just over a year ago. Recently, it has dropped to a figure of about half that. Although the Federal Reserve has a target of 2%, the fall has made daily life more affordable for millions of Americans.

There was a concern a year ago that inflation could cause a recession. That opinion was frequently stated well into 2023. It is no longer the primary view of economists

A major supply chain lock because of port strikes which last for any significant period, will take the economy back to a period of inflation.

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