Is the LA port strike costing $1 billion a day? Don't count on it, says economist

Picketing continues outside the terminals at the Ports of Long Beach and Los Angeles.
Picketing continues outside the terminals at the Ports of Long Beach and Los Angeles.
Brian Watt
Picketing continues outside the terminals at the Ports of Long Beach and Los Angeles.
Striking clerical workers at Pier 400 walk the picket lines Thursday at the Port of Los Angeles.
Brian Watt/KPCC

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As the strike that has crippled operations at the Port of Los Angeles, the nation's largest port complex,  entered its second week Monday, retailers were seeking White House intervention while one economist was downplaying estimates that the strike was costing the region $1 billion a day.

The National Retail Federation — which calls itself the largest retail trade organization in the world — sent a letter to the White House, asking the Obama administration to stop the strike. Asked when the federation's members will sound the alarm about this strike, Jonathan Gold, the Federation’s vice-president of supply chain and customs policy, said: “They’re already at that point, to be honest.”

Gold added: “We understand they’re concerned, but at this point they need to be more than concerned, and they need to take action. The negative consequences for the U.S. economy with this continued strike are significant.”

RELATED: Strike shuts down busiest pier in Port of Los Angeles

The strike began last Tuesday and has idled operations at 10 of the 14 terminals at the port complex, bringing to a standstill three-quarters of the cargo that moves through the nation's busiest shipping complex, the Associated Press reported. Experts say it is also idling thousands of truck drivers and, if it continues, threatens to create shortages for wholesalers and retailers around the country.

Gold said the strike is costing more than $1 billion a day, quoting an oft-repeated figure he says is based on analysis from multiple economists.

But is the figure accurate?

“I may have been responsible for that, in part,” said Jock O’Connell, a frequently quoted international trade economist.

O'Connell said last week that L.A. and Long Beach ports handle about $1 billion of cargo a day, but many misinterpreted that to mean the strike is costing that much. Not so, O'Connell said.

“That was not what I meant,” O’Connell said. “Clearly the billion dollars or so of cargo that would have moved through the port had it been open is not going be dumped into the harbor.”

O’Connell says it will take a long time to measure the true impact of the strike, but he expects it to be much less than $1 billion a day.

It helps that this is one of the slowest times of year at the ports, he added. “The big rush to get merchandise to stores ended as far as the ports are concerned several weeks ago,” said Gold.

That’s not to say the partial shutdown is by any means insignificant. Some 40 percent of the nation’s imports come through these ports.

RELATED: Los Angeles-Long Beach port strike enters second week

The Port of Long Beach’s Art Wong says that with so much cargo piling up, he’s getting calls from companies all over the country asking when they can expect their goods to arrive.

“I had a woman from Redbox, the movie kiosk people, saying that they didn’t get parts to repair their kiosks, and their box has been sitting out for a week and if they don’t get these parts there’s going to be kiosks they can’t fix,” said Wong.

Wong says there’s also a domino effect on millions of jobs nationwide, starting with those of the drivers hauling containers from the port.

“Five or ten thousand truck drivers aren’t able to come and pick up or deliver cargo,” says Wong. “That ripples out to the rail yards and warehouses throughout Southern California, where half a million people could be affected.”

It’s quite an impact for a strike that started with just 600 clerical workers walking off the job.