A big U.S. port strike could shake the economy this week. Here's what to know
The largest union of maritime workers in North America is threatening to go on a full strike across the East and Gulf Coasts, which could devastate the U.S. economy if a deal isn’t reached by early this week.
The International Longshoremen’s Association (ILA)
represents more than 85,000 dockworkers across more than 100 East and Gulf Coast ports. A strike could start as early as Tuesday if the ILA doesn’t reach an agreement with the alliance of companies operating at more than a dozen major ports. Both sides remained far from reaching a deal on Friday, with the contract set to expire after Monday.
Here’s what you should know.
Which ports and what types of goods would be affected by the strike?
Ports from Maine to Texas would be affected, including facilities in those states as well as Massachusetts, New York, New Jersey, Pennsylvania, Maryland, Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, and Louisiana. About 51% of the overall port capacity is handled by those facilities, according to the Mitre Corporation.
Practically all industries would be impacted by a strike. Shipments of foreign fruit including pineapples, bananas, citrus, and grapes, which normally enter the U.S. through its eastern and Gulf coasts, could end up caught in the crosshairs. Auto and pharmaceutical companies would also face severe disruptions in getting goods to stores, which could lead to prices spiking across the country.
Exact estimates of how the economy would be affected vary widely, but they all agree that a strike would have devastating effects.
Some, like shipping container marketplace Container xChange, estimate that a labor stoppage could cost as much a $1 billion each day workers are on the picket lines, while J.P. Morgan (JPM) analysts expect strike-related closures to hit up to $5 billion per day. Oxford Economics has said a prolonged strike could impact up to 100,000 jobs and reduce U.S. economic activity by between $4.5 billion and $7.5 billion for every week it persists.
“The congestion and delays at these major ports will severely impact the availability of containers, increase costs, and disrupt schedules,” Container xChange CEO Christian Roeloffs, whose company works with more than 1,500 shipping companies, said in a Thursday advisory to customers.
Grain exports would remain unaffected, but a strike would impact agricultural exports, such as soybeans and other agricultural products.
Why are the dockworkers threatening to strike, and what do they want?
The ILA says workers are demanding higher wages that would compensate them for their contributions to “enriching their employers and the industry,” and a salary that addresses the rising inflation that “eats away” at their current salary levels.
“A sleeping giant is ready to roar on Tuesday, October 1, if a new Master Contract Agreement is not in place,” said Harold Daggett, president of the ILA. “My members have been preparing for over a year for that possibility of a strike.”
Workers are also pushing for protection against automation and new technology devices in terminals. According to a statement from the United States Maritime Alliance (USMX), negotiations with the ILA began in the last week of May.
But those talks haven’t led to much progress.
On Thursday, the alliance filed an unfair labor practice charge and requested the National Labor Relations Board require the union to resume bargaining. In response, the ILA slammed the alliance’s “weak publicity campaign to fool the American public” and called it “another publicly stunt.” Furthermore, the ILA said that the “real” unfair labor practice is the alliance’s alleged failure to adequately compensate workers.
“USMX filing these charges four days before the expiration of the current Master Contract clearly illustrates what poor negotiating partners they have been,” the ILA said. “If it wasn’t for the ILA engaging in serious and productive negotiations, most of the local agreements would not have been settled over the past year.”
What are others saying about the strike?
On Thursday, the White House called for the parties to settle their differences and avert a strike, telling CBS News that senior officials from the Labor Department and Transportation Department are working to help move negotiations along. On Monday, the USMX said it had received outreach from the Federal Mediation and Conciliation Service, a government agency that helps workers and employers come to agreements, along with other agencies.
“We are coordinating with partners across the supply chain to prepare for any potential impacts,” Steve Burns, a Port Authority of New York & New Jersey spokesperson, told Business Insider. “For the over 600,000 regional jobs our port supports and the $240 billion in goods moved through here each year, we urge both sides to find common ground and keep the cargo flowing for the good of the national economy.”
“We should probably expect there to be a work stoppage and we shouldn’t get surprised if there is one,” Griff Lynch, CEO of the Georgia Ports Authority, told the Associated Press.
The companies that likely most rely on the ports remaining open, such as shipping companies, have started warning customers that a port shutdown may disrupt business.
MSC, a major shipping company, said on Thursday that booking adjustments, including rolls to other vessels or cancellations, may be necessary, according to a travel advisory. It also said it reserves the right to not accept new refrigerated bookings at the affected ports if a strike begins, and urged customers to move products before Oct. 1.
Hapag-Lloyd plans to implement a “work interruption destination surcharge” for imports to the U.S. Gulf and East Coasts. Maersk has issued a similar surcharge that will go into effect on Oct. 21, depending on the impact of the potential disruption to the supply chain. Another major player, CMA-GCM, announced on Sept. 17 a series of changes to its charges for the ports, which would come into effect on Oct. 11.
“Businesses are acting now to reroute shipments and secure their container supply, or they risk being left stranded in a congested and costly aftermath,” said Roeloffs, the Container xChange CEO, noting that small traders “in particular’ may be squeezed.
