It’s perhaps the biggest threat to supply chains since the pandemic, which is why we refer to it as the union variant. 

In less than a week, the International Longshoremen’s Association (ILA), North America’s largest maritime workers’ union, is set to strike if a new contract can’t be reached with the United States Maritime Alliance (USMX).

Industry groups warn that supply chains could be thrown into complete disarray, with ports up and down the US — responsible for billions in daily trade — at a standstill.

‘A Sleeping Giant is Ready to Roar’

The ILA and USMX last met in May, but negotiations broke down in June and haven’t (formally) resumed since. As the clock has ticked closer and closer to strike day, market observers have been left with increasingly feverish nightmares. A coalition of nearly 200 trade groups warned last week, “A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend.”

The central sticking point in negotiations is wages. “Our members are struggling to pay their mortgages and rent, car payments, groceries, utility bills, taxes, and in some cases, their children’s education,” the ILA said in a statement, noting its rank-and-file members won’t sign contracts with sub-dollar wage increases after 30 years of 2% average hikes — even 0% in some years. If the ILA and USMX can’t agree on a new contract, a staggering amount of economic activity will be in immediate jeopardy:

• The contract up for renewal covers all ports from Maine to Texas, including Houston, Miami, New York, and New Orleans — East and Gulf Coast ports account for over 68% of America’s containerized exports and over 56% of containerized imports, representing $2.1 billion in trade value every day, according to the National Association of Manufacturers.
• Global supply chains would feel an immediate sting. One example: “The Germany to Charleston and Savannah corridor is crucial for European automakers which would be shut down in the event of a strike,” wrote Jim Mancini, the vice president of North American surface transportation at logistics firm C.H. Robinson.

“A sleeping giant is ready to roar on Tuesday, October 1, 2024, if a new Master Contract Agreement is not in place,” ILA president Harold Daggett said. 

Deus Ex Machina? A last-minute intervention, such as when the Biden administration moved to stop a freight rail strike in 2022, is highly unlikely. The White House said last week that it plans to stay out of this one.

As any nuclear physicist will tell you, every little thing counts.

On Monday, a group of 14 large banks and other heavy-hitter financial institutions came together to announce that they’re going to up their support for the nuclear power industry. Historically, nuclear power has had the potential to make financiers a scooch nervous, even when they have their radiation suits on.

Bank on It

Nuclear power has spent a lot of its history as a pretty divisive energy source. Some countries have embraced it while others have shunned it, citing the dangers associated with disasters like Chernobyl and Fukushima. On top of that level of political uncertainty, nuclear power stations also just happen to be financially risky projects with a tendency of going way over budget and taking much longer to build than advertised. Even government drives to increase nuclear energy capacity, like former President George W. Bush’s in the 2000s, have fallen flat for lack of investor enthusiasm.

Now however, it seems like the winds may be shifting in nuclear’s favor (and hopefully not carrying any fallout with them):

• Banks including Bank of America and Goldman Sachs said Monday they will commit to more financing in the nuclear sector, aiming to achieve a goal laid out at COP28 last year to triple the world’s nuclear capacity by 2050.
• Nuclear power is also getting a boost from Big Tech companies — particularly Microsoft — that are hunting for future energy supply to support their AI ambitions and data center-building.

Less is More: A relatively new area of nuclear power that’s attracted a lot of attention is small modular reactors (SMRs), which are designed to be smaller, easier-to-build versions of traditional reactors. SMRs have received government support and spawned a new generation of nuclear power startups, and now they’re starting to make their way out into the world. Last week a US firm called Holtec, which makes parts for nuclear reactors, announced it is building a new factory in the UK to manufacture SMR components. 

It’s not just electric vehicles and it’s not just China.

On Monday the Biden administration announced it’s introducing a ban on both hardware and software for “connected vehicles” from China and, incidentally, Russia. The White House said it’s introducing the ban, which is to be enacted by the Department of Commerce, as a matter of national security, saying that malicious actors could use our fancy internet-connected cars for “surveillance and sabotage.”

Driven Out

With this newest ban, the Biden administration is adding a new facet to its trade war with the Chinese auto industry. China-made EVs are completely absent from the US market due to the tariffs the US government has placed on them, and the new ban on software and hardware that makes up vehicles’ “connectivity” is effectively a way to box out every other kind of Chinese car as well, given that pretty much every vehicle rolling off the modern assembly line has some kind of internet connection baked in.

While there aren’t a ton of Chinese car brands on US roads today, there are a surprising number of China-made cars:

• In 2023, US consumers bought a total of 104,000 China-made cars from major brands including Buick and Volvo. 
• The Biden administration said in a press statement that the embargo would block “the import or sale of certain connected vehicle systems designed, developed, manufactured, or supplied by entities with a sufficient nexus to the PRC or Russia,” and listed fairly standard systems such as Bluetooth, cellular, and satellite systems.

The ban on software, if adopted, would take effect in the 2027 model year; the hardware ban would start in 2029, or the 2030 model year.

Téslà Vu: US concerns about cars’ cybersecurity measures mirror worries that China itself has voiced in the past. Tesla came under heated scrutiny in China in 2021, and the government banned military personnel from driving Tesla vehicles, citing security concerns. Tesla managed to flip the script, however, and get on an official government purchase list in July 2024. Oh how the Teslas have turned.