How the U.S. Dockworkers' Port Strike Will Affect Businesses

As the U.S. dockworkers' strike sweeps across the East and Gulf Coasts, the consequences for businesses are coming into sharper focus. With nearly 50,000 members of the International Longshoremen’s Association (ILA) halting operations at 36 major ports, the disruption is poised to upend supply chains, strain inventory levels, and affect how businesses manage their cash flow. This strike, the first of its kind since 1977, could cost the economy billions of dollars daily and leave US merchants scrambling to adapt.

What Does the Dockworkers' Strike Mean for Merchants?

For merchants, the U.S. dockworkers' strike has profound and immediate implications that extend far beyond just delays in product availability. Whether your business relies on international imports or domestic goods, this disruption is likely to create challenges that impact your cash flow, customer relationships, and overall business operations.

1. Inventory Shortages: With ports closed along the East and Gulf Coasts, merchants that depend on goods imported through these regions will experience significant delays. Items like consumer electronics, clothing, and seasonal goods may be stuck in transit, leading to stock shortages at a critical time for businesses preparing for the holiday season.
2. Customer Satisfaction at Risk: As products fail to reach store shelves or customers’ doors on time, businesses face a growing risk of dissatisfied customers. This is particularly problematic for eCommerce merchants and businesses offering pre-orders, such as those fulfilling Kickstarter campaigns. Refund requests and chargebacks will likely increase, and keeping customers informed will be essential to preserving relationships.
3. Increased Shipping Costs: Merchants may have to consider rerouting shipments through West Coast ports or even switching to air freight—both of which could drive up shipping costs. These added expenses may either eat into profit margins or be passed on to customers, increasing the risk of decreased sales as prices rise.
4. Supply Chain Adjustments: Retailers might need to shift to domestic suppliers where possible to avoid international shipping delays. However, this isn't an option for all businesses, particularly those that deal with specialized or imported products. Merchants who can make these adjustments will need to review contracts with new suppliers, which may have implications for payment terms and transaction volumes.
5. Impact on Payment Processing: The reduction in inventory and sales could lead to a decrease in transaction volume, directly affecting payment processing. Merchants relying heavily on imported goods may see a dip in processed transactions, while those switching to domestic suppliers or alternative shipping routes might experience a temporary boost in local transactions. Payment processors will need to manage fluctuating volumes and transaction values carefully.

By preparing for these challenges, merchants can better navigate the ongoing disruptions. Stocking up on inventory where possible, being transparent with customers about potential delays, and exploring alternative shipping options will be essential strategies for maintaining business continuity during this strike.

Supply Chain Disruptions Will Challenge Payment Processing

As inventory shortages begin to set in, the immediate effect on businesses is clear: fewer goods to sell, fewer payments to process. For businesses heavily reliant on imports—particularly from Asia—the strike creates a bottleneck that could grind payment operations to a halt. The stakes are particularly high for industries like retail, automotive, and food, where continuous inventory is critical to maintaining revenue flow.

“Payment processing is the lifeblood of business operations, but without the goods to sell, that flow gets disrupted,” says Michael Seaman, CEO of Swipesum. “When stock is stuck at sea, businesses are left with fewer transactions, lower revenue, and an urgent need to manage cash flow differently.”

Refunds, Chargebacks, and the Ripple Effect

With goods delayed or unavailable, businesses may see a surge in refund requests and chargebacks. Customers won’t wait patiently if their orders are held up, and merchants will be under pressure to issue refunds quickly, creating additional stress on payment systems.

Merchants and payment processors alike need to prepare for the increased volume of refunds and chargebacks, which can lead to operational bottlenecks. Dispute management systems will likely be pushed to their limits as merchants scramble to maintain customer satisfaction and protect their reputations.

The Automation Debate and Labor Concerns

At the core of the strike is a battle over port automation. The ILA is pushing for higher wages and firm limits on automation, while employers are looking to increase efficiency with automated systems. For payment processors and businesses alike, automation represents a solution to many logistical and operational problems, but for workers, it’s a threat to job security.

“Automation is a double-edged sword,” Seaman explains. “While it can solve many operational challenges for businesses, it also raises valid concerns for workers whose livelihoods are at stake. As this strike continues, it highlights the tension between innovation and labor that every industry will have to confront.”

Higher Costs, Slower Sales, and a Strain on Transaction Fees

As shipping costs rise and rerouted shipments clog the system, businesses are likely to pass on these additional expenses to consumers. Higher prices will translate into larger transaction amounts, which could marginally increase payment processing fees. However, if consumer spending slows due to inflated prices, the volume of transactions could decrease overall, impacting the bottom line for both merchants and processors.

“The shipping delays and price increases we’re seeing now are just the beginning,” says Seaman. “Businesses will need to keep a close eye on their cash flow and transaction volumes. It’s not just about moving goods; it’s about how this disruption impacts your ability to process payments and manage revenue.”

What Can Businesses Do Now?

With uncertainty looming, businesses should take several proactive steps to mitigate the risks of the ongoing strike and ensure their payment processing systems remain functional.

1. Increase Inventory Where Possible: Businesses with the capacity to stock up on goods from domestic suppliers should do so to avoid shortages.
2. Communicate with Customers: Transparency about delays can maintain customer trust and loyalty. Keeping customers informed about when they can expect their products is crucial.
3. Prepare for Refunds and Chargebacks: Streamline your processes for managing refunds to minimize operational strain.
4. Embrace Automation in Payment Processing: While automation in shipping remains contentious, businesses can explore automation within their payment systems to handle increased loads and minimize human error.

Conclusion: Navigating the Crisis

The U.S. dockworkers' strike is more than just a supply chain disruption—it’s a reminder of the delicate balance between labor, automation, and global commerce. As businesses face inventory shortages, higher costs, and pressure on their payment systems, those that act swiftly and strategically will be best positioned to weather the storm.

“This strike has shown us how fragile our global supply chains are,” says Seaman. “But with the right preparation—whether that’s diversifying suppliers, automating processes, or keeping a close eye on cash flow—businesses can maintain resilience in the face of disruption.”