US East Coast port strike looms for first time since 1977
NEW YORK : Thousands of dockworkers at every major in the US East and Gulf coast port are girding to strike starting early next week, threatening to close trade gateways that handle about half of all goods shipped in containers in and out of the U.S.
Negotiations between the union representing dockworkers and a 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 bargain.
The United States Maritime Alliance (USMX) has filed an unfair labor practice with the National Labor Relations Board requesting “immediate injunctive relief — requiring the union to resume bargaining — so we can negotiate a deal,” the alliance said Thursday.
The NLRB confirmed it had received the unfair labor practice charge, which is being docketed by its regional office in Newark, New Jersey. The charge will appear on the agency’s website in the next few days, after which an investigation would begin.
USMX’s appeal to the NLRB was derided as “another publicity stunt” by the International Longshoremen’s Association (ILA). “Foreign owned companies, represented by USMX, set up shop at American ports, earn billions of dollars in revenues and profits, take those profits out of country, and fail to adequately compensate the ILA longshore workforce for their labor are engaging in a real ‘unfair labor practice,'” the union said in a statement posted Thursday.
Top Biden administration officials including Transportation Secretary Pete Buttigieg, Acting Labor Secretary Julie Su and Lael Brainard, Director of the National Economic Council, met with USMX members on Friday, urging them to negotiate ahead of the contract expiring.
Experts say a shutdown could severely hamper the flow of goods and raise shipping costs. Any spike in such expenses could be passed on to consumers just as U.S. inflation normalizes, and even potentially hinder the Federal Reserve as it finally pivots to lowering interest rates.
Here’s what to know about the labor fight, which would be the first mass work stoppage at eastern ports in nearly half a century.
What are the key issues in the labor dispute?
The dispute involves a contract covering tens of thousands threatening to strike at ports from Massachusetts to Texas if a new labor deal with the USMX isn’t reached before the current contract expires at midnight on September 30. A walkout would be the first East Coast dock strike since 1977.
A total of 14 ports involving some 25,000 workers could be affected by the strike, according to USMX: Baltimore; Boston; Charleston, South Carolina; Jacksonville, Florida; Miami; Houston; Mobile, Alabama; New Orleans; New York/New Jersey; Norfolk, Virginia; Philadelphia; Savannah, Georgia; Tampa, Florida; and Wilmington, Delaware.
But because the economic activity in ports touches a range of businesses, such as warehousing and transport, the fallout from work stoppages could put more than 100,000 employees temporarily out of work, according to economists.
Union workers at ports in the East Coast and Gulf Coast earn a base wage of $39 an hour after six years on the job. That is significantly less than their unionized West Coast peers, who make $54.85 an hour — a rate that will increase to $60.85 in 2027, excluding overtime and benefits.
Assuming a 40-hour workweek, West Coast port workers are making more than $116,000 a year, versus $81,000 for their counterparts in the East. The ILA’s initial demands included a 77% wage hike over six-year contract, with the labor group arguing that the increased pay would make up for the surge in U.S. inflation in recent years.
The USMX in August offered what it called an “industry leading” pay hike, but the sides remain far apart.
“Mark my words, we’ll shut them down October 1 if we don’t get the kind of wages we deserve,” Harold Daggett, President of the ILA, said earlier in the month.
Yet the differences are not only over pay. To protect job security, the ILA is demanding a complete ban on the automation of cranes, gates and container movements used in the loading or unloading of cargo.
The Maritime Alliance said it offered to maintain provisions in the current contract barring fully automated terminals, while also banning use of semi-automated equipment in a new labor agreement.
Unable to bridge the divide, the ILA in June suspended negotiations with USMX, saying the use of automated gates to let trucks enter ports without ILA labor violated its existing labor agreement.
What impact could a strike have?
The ports that could close in a strike handle more than 68% of all containerized exports in the U.S. and roughly 56% of containerized imports, according to industry data. So even a short strike would cause significant disruptions in regional trade flows.
A strike would reduce U.S. economic activity by between $4.5 billion and $7.5 billion for every week it continues, according to analysts at Oxford Economics. The investment research firm estimates it would take up to a month to clear the backlog of shipments that pile up while ports remain shut.
Although West Coast terminals could absorb some cargo diverted from eastern ports, they couldn’t handle it all, nor could the U.S. rail system, experts say.
Should a strike persist longer than a month or so, some companies could face shortages of parts and other inputs. Much of the raw materials that go into a range of products flow through the East and Gulf Coast ports, such as cotton, wood and copper. The auto and pharmaceutical industries, which maintain lean inventories, could be affected, while port shutdowns in Miami and Norfolk could affect tobacco companies.
In addition, a strike could hamper shipments of products such as bananas, manufacturing components and plywood, interrupting the flow both of consumer goods and industrial parts for factories. Fresh meat and other refrigerated food could spoil, resulting in shortages and increased prices.
“I think everyone’s a bit nervous about it,” said Mia Ginter, Director of North America ocean shipping for C.H. Robinson, a logistics company. “The rhetoric this time with the ILA is at a level we haven’t seen before.”
The labor dispute also comes at a time when the Federal Reserve is closely monitoring the labor market for signs of weakening.
“In principle, the Fed should look through any temporary weakness, but it might be difficult to separate the noise from the signal. Therefore, the strike would increase the odds of another 50 basis point cut in November,” Grace Zwemmer, Associate U.S. economist, Oxford Economics, wrote in a Thursday research note.
How are companies preparing?
By contrast, consumers probably wouldn’t notice shortages of store goods during the holiday shopping season, as most products are already housed in warehouses after being transported ahead.
Imports to U.S. ports are running 10% ahead of where they were last year, indicating that some cargo had been shipped in expectations of a strike, according to Ben Nolan, a transportation analyst at investment bank Stifel.
“Many retailers have already taken steps to mitigate the potential impact of a strike by bringing in products earlier or shifting products to the West Coast,” said Jonathan Gold, Vice president of supply chain and customs policy at the National Retail Federation.
Still, given the complexity and interconnectedness of global supply chains, “Even a minor disruption would have a negative impact and cause delays at a critical time for both retailers and consumers,” he added.
The ILA on Wednesday said its members would continue to handle all military cargo in the event of a strike, and would also continue to work passenger cruise vessels so as not to inconvenience “the tens of thousands of Americans who have booked trips in advance.”
Could there be a political solution?
If a strike were deemed to threaten national health or safety, under the Taft-Hartley Act President Joe Biden could seek a court order for an 80-day cooling-off period.
Although a Biden administration official tells CBS News that the U.S. Labor Department is monitoring the situation and has been in touch with the sides, there are currently no plans to get involved in the talks.
“We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” the White House told CBS News.
By contrast, the Biden administration has in recent years intervened to resolve potentially disruptive labor disputes.
In 2022, Mr. Biden and Congress stepped in to prevent a railroad strike, with the president signing legislation crafted by lawmakers to impose a tentative deal on dozens of unions representing 115,000 workers. And in 2023, Acting Labor Secretary Julie Su played a key role in brokering a deal to avert a strike and broker a new labor deal for West Coast dockworkers.
The union’s leverage is also stronger ahead of the presidential election as candidates vie for the labor vote, and with visions of clogged ports and product shortages during the pandemic still in voters’ minds.
“If ever there was a time that labor can get what they want,” Stifel’s Nolan said, “it’s right now.”
Some observers think that when push comes to shove, Mr. Biden would act to prevent the walkout.
It’s unlikely that the U.S. government would intervene as promptly as Canada did in a labor dispute that shut down the country’s rail traffic last month, when the Canadian government ordered railroads to enter binding arbitration less than a day in, noted Zwemmer at Oxford Economics.
“However, if the strike lasts for several weeks, the odds of government involvement in the negotiations will rise, especially with the presidential election rapidly approaching,” the economist stated.
“The potential strike at East and Gulf Coast ports is unlikely to trigger any major economic disruption because we strongly suspect that, this close to the election and despite denials ahead of time, President Biden would have little choice but to step in and invoke back-to-work legislation,” analysts at Capital Economics wrote.
Source : CBS News