With the International Longshoremen’s Association (ILA) and US Maritime Alliance contract set to expire on September 30th, the threat of a major strike at East and Gulf Coast ports looms large. This timing couldn’t be worse for retailers gearing up for the critical holiday season. A disruption of this scale could impact the movement of goods through ports from Boston to Houston, all of which handle millions of tons of cargo annually and employ thousands of unionized dockworkers.

As shown in the chart, New York/New Jersey leads the pack with 32.3 million tons of cargo, employing 3,327 workers. Other critical ports like Savannah (18.1 million tons, 1,455 workers) and Houston (12.6 million tons, 2,086 workers) also play key roles in the supply chains of many US retailers. A prolonged work stoppage could severely impact these hubs and, by extension, disrupt supply chains across the country.

For companies that rely heavily on these ports, the consequences could be profound—affecting everything from inventory to profit margins. With this context in mind, here’s a breakdown of the potential winners, losers, and to be determined stocks as this situation unfolds.

Winners

• Costco (COST): Costco stands out as one of the most prepared for this kind of disruption. They have diversified their supply chain, routing products through various ports across the country, including the West Coast. Their proactive approach of rerouting freight and diverting shipments means they are well-positioned to ensure holiday inventory remains on schedule. Costco’s ability to pivot quickly is one reason they could weather any strike with minimal impact, allowing them to maintain inventory levels and full-price sales.
• Dollar Tree (DLTR): With over 50% of its freight routed through East Coast ports, Dollar Tree is already planning for potential delays. However, they’ve taken significant steps to mitigate these risks, including rerouting deliveries to alternative ports and putting plans in place to use airfreight where necessary. This proactive approach could limit disruption to their low-cost goods, giving them a potential advantage over competitors who are less prepared.
• Lululemon (LULU): Lululemon has a strong track record of agility when it comes to supply chain management. Their ability to reroute shipments, including utilizing airfreight for high-priority items, positions them well to maintain smooth operations even in the event of port disruptions. The luxury price point of their goods also allows for some flexibility to absorb higher shipping costs.

Losers

• Dick’s Sporting Goods (DKS): Dick’s relies on vertical brand products for about 13% of their sales, much of which is routed through East Coast ports. Their supply chain is highly centralized, and while they’ve taken some steps to mitigate potential issues, their ability to pivot quickly is limited. Any significant delays could result in inventory shortages during the peak holiday season, forcing the company to offer markdowns that would squeeze margins.
• Ollie’s Bargain Outlet (OLLI): Ollie’s doesn’t have the supply chain flexibility of other larger retailers. They depend heavily on imported goods through West Coast ports, which are already strained. With less room to maneuver and fewer resources to expedite shipments through alternative methods like airfreight, Ollie’s could see delays that impact its low-margin, discount-driven business model.
• Nordstrom (JWN): Nordstrom’s private-label brands rely heavily on West Coast and Asia-based imports, putting them at a disadvantage if East Coast ports become congested. While they haven’t revealed specific contingency plans, their lack of clear communication regarding potential disruptions signals that they could face significant challenges in getting their holiday products to stores on time.

To Be Determined

• Target (TGT): Target has indicated that the majority of their shipments are processed through West Coast ports, but they are actively monitoring the situation and preparing contingency plans. The key question for Target is whether these plans are robust enough to prevent holiday season delays. If the strike drags on, rerouting shipments could become increasingly difficult.
• Home Depot (HD): Home Depot is another retailer to watch closely. While their domestic supply chains give them some insulation from disruptions, the cost of rerouting goods and longer lead times could still put pressure on margins. The impact on Home Depot will depend largely on how long any potential port strike lasts.
• BJ’s Wholesale (BJ): Like Costco, BJ’s has diversified its supply chain and put contingency plans in place. However, they are still monitoring the situation closely and have not provided clear insights into how they would handle a prolonged strike. BJ’s ability to adapt quickly will be key to avoiding major inventory shortages during the holiday rush.

As retailers brace for potential disruptions, the situation remains fluid. While some companies have taken proactive measures to minimize risks, others may face significant challenges. For investors, this is a crucial moment to pay attention to how these companies manage their supply chains in the face of uncertainty.

LikeFolio Pro members will be the first to know if we issue a trade alert on any of these stocks, allowing them to capitalize on potential opportunities that arise from the strike