A critical link in the toy industry supply chain has broken ahead of the holiday season after more than 47,000 members of the International Longshoremen’s Association (ILA) walked off the job at 36 ports across the Eastern US coast last night. 

JP Morgan is forecasting that the labor stoppage could cost the US economy upwards of US$5 billion per day, keeping products including toys, furniture, pharmaceuticals, cars and electronics stuck on ships until a resolution is reached. Longer term, the strike has the potential to reignite inflation and increase the cost of goods for consumers during the holidays. 

Major toycos such as Hasbro and Mattel have been preparing for the strike for months by increasing production over the summer and shifting their distribution routes to the West coast, says global financial firm UBS. But analysts say that toymakers will likely face spot rate and contract rate increases on shipments and freight at busier Western ports. 

This is ILA’s first coast-wide port strike since 1977. Union members are fighting for new contracts with the United States Maritime Alliance, with the goal of increasing wages (up to 77% over six years) and reducing automation. And it’s not the only port union taking these measures. The Maritime Employers Association (MEA) began a three-day strike at the Port of Montreal on Monday, resulting in the shut-down of two container-traffic terminals. While this strike will affect overall logistics movements, especially in conjunction with the US port strikes, Montreal is not a major hub for toy imports since most shipments to Canada are freighted up from US ports.