Thousands of dock workers in every major East and Gulf Coast Port They are set to strike early next week, threatening to shut down trade gateways that handle about half of all containerized goods in and out of the US.
Negotiations between the union representing dock workers and the shipping industry group representing terminal operators and ocean carriers have been stalled for months, with both sides this week issuing conflicting statements about their willingness to negotiate.
The United States Maritime Alliance (USMX) has filed an unfair labor practice complaint with the National Labor Relations Board, seeking “immediate injunctive relief — the union must renegotiate — so we can negotiate a contract,” the alliance said Thursday.
A shutdown could severely affect the flow of goods and raise shipping costs, experts say. As U.S. inflation normalizes, any increase in such spending could be passed on to consumers and deter the Federal Reserve when it finally centralizes. Lowering interest rates.
Here’s what to know about the labor strike, the first mass strike in eastern ports in nearly half a century.
What are the main issues in labor disputes?
The union representing 45,000 dock workers, the International Longshoremen’s Association (ILA), is threatening to strike at 36 US ports if a new labor agreement is not reached with USMX before the current contract expires at midnight on September 30. First East Coast cruise stop since 1977.
According to USMX, a potential walkout could involve 25,000 workers.
Union workers at ports on the East Coast and Gulf Coast earn a base wage of $39 an hour after six years on the job. That’s significantly less than their unionized West Coast counterparts, who earn $54.85 an hour — which will increase to $60.85 in 2027, excluding overtime and benefits.
Assuming a 40-hour work week, West Coast port workers earn more than $116,000 a year, compared to $81,000 for their counterparts in the East. The ILA’s initial demands included a 77% wage increase over a six-year contract, with the labor group arguing that the increased wages would offset the rise in U.S. inflation in recent years.
In August USMX announced what it called an “industry-leading” wage increase, but the pages are far apart.
“Mark my words, we’re going to shut them down on October 1st if we don’t get the wages we deserve,” ILA President Harold Daggett said earlier this month.
However, the differences are not only in wages. The ILA is demanding a complete ban on automation of cranes, gates and container movements used to load or unload cargo at 36 ports to protect job security.
The Maritime Alliance said it proposed to maintain provisions in the current contract banning fully automated terminals while banning the use of semi-automated equipment in the new labor agreement.
Unable to bridge the rift, the ILA suspended negotiations with the USMX in June. to say The ILA’s use of automatic gates to allow trucks to enter ports without labor violated its existing labor agreement.
What impact will the strike have?
Ports that could be closed in a strike handle more than 68% of all containerized shipments in the U.S. and roughly 56% of containerized imports, according to industry data. So even a short strike can cause significant disruptions in regional trade flows. One analysis estimated the cost to the US economy at $5 billion a day.
For example, there will be heavy vehicle traffic at major locations across the country as cargo is diverted to West Coast ports. For every day of port strike, it takes four to six days to catch up on the backlog on ships, analysts say. While West Coast terminals can absorb some cargo from Eastern ports, they can’t handle it all, nor can the U.S. rail system, experts say.
If the strike lasts more than a month, some companies may face shortage of spare parts and other inputs. The automotive and pharmaceutical industries, which maintain lean inventories, could be particularly affected. Exports of cars and other goods moving through the East Coast could be affected.
In addition, the strike will disrupt exports of commodities such as bananas, manufacturing components and plywood, disrupting the flow of consumer goods and industrial components for industries. Fresh meat and other refrigerated foods can spoil, resulting in shortages and higher prices.
“I think everyone is a little nervous about it,” said Mia Ginter, director of North American ocean shipping for logistics company CH Robinson. “The rhetoric with the ILA this time is at a level we’ve never seen before.”
How are companies preparing?
In contrast, consumers may not notice a shortage of store merchandise during the holiday shopping season because most products are stored in warehouses after being transported beforehand.
Jonathan Chappell, senior managing director of transportation at Evercore ISI, an investment research firm, said the strike doesn’t mean “Santa isn’t coming.”
According to Ben Nolan, transportation analyst at investment bank Stifel, imports to U.S. ports are up 10% from last year.
“Many retailers have already taken steps to minimize the potential impact of the strike by bringing in products or moving products to the West Coast,” said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.
However, given the complexity and interconnectedness of global supply chains, “even a small disruption can have a negative impact and cause delays at a critical time for both retailers and consumers,” he added.
The ILA said Wednesday that its members would continue to handle all military cargo in the event of a strike and would continue to work on passenger ships to avoid inconvenience to the “tens of thousands of Americans who have booked trips in advance.”
Will there be a political solution?
If the strike is considered a threat to national health or safety, under Taft-Hartley Act President Joe Biden may seek a court order for an 80-day cooling-off period.
A Biden administration official told CBS News that the U.S. Department of Labor is monitoring the situation and is in contact with the parties, but there are no current plans to engage in negotiations.
“We never called on Taft-Hartley to break the strike, and we are not considering doing so now,” the White House said. Reuters Earlier this month.
In contrast, the Biden administration has recently intervened to resolve disruptive labor disputes.
In 2022, Mr. As Biden and Congress moved to block the railroad strike, the president signed legislation crafted by lawmakers to impose a temporary contract on dozens of unions representing 115,000 workers. In 2023, Acting Secretary of Labor Julie Su was instrumental in brokering an agreement to avoid a strike and brokering a new labor contract for West Coast dockworkers.
Union influence remains strong ahead of the presidential election, as candidates compete for labor votes and views of clogged ports and product shortages during the pandemic are still on voters’ minds.
“If ever there was a time when labor could get them what they want,” said Stifel’s Nolan, “it’s now.”
Some observers think that, when push comes to shove, Mr. Biden will act to prevent a walkout.
“A potential strike at Eastern and Gulf Coast ports is unlikely to trigger any major economic disruption because it’s so close to an election and despite early denials, President Biden has no choice but to back down. Act to Work,” analysts at Capital Economics wrote.
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contributed to this report.
