The massive U.S. port strike could have 'devastating' effects. Here's what to know
Thousands of dockworkers across the East Coast and Gulf Coast are officially on strike after negotiations between their union and an alliance of employers failed.
The International Longshoremen’s Association (ILA) represents more than 85,000 workers and has been negotiating since last May with companies, terminal operators, and port associations represented by the United States Maritime Alliance (USMX). Without a contract among the groups, as many as 45,000 members walked off the job at more than a dozen major ports, including facilities in New York and Texas.
The effects of the strike will likely be far-reaching, causing ripple effects in industries that rely on materials such as steel and lumber. Almost 180 trade associations representing companies across a series of industries — including automakers, retailers, toymakers, and even firms selling Halloween costumes — have warned the strike will be “devastating.”
Here’s what you should know.
Why are U.S. port workers on strike? 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 USMX, negotiations with the ILA began in the last week of May.
But those talks haven’t led to much progress.
How could the strike affect the economy?
It’s tough to say exactly how much damage the strikes will do to the broader global economy — or even the U.S. alone. Estimates vary from as low as $540 million per day, according to The Conference Board, to up to $5 billion per day, according to J.P. Morgan. As many as 100,000 jobs are expected to be affected, Oxford Economics said last month.
But the strike is likely to have major consequences for the broader U.S. economy. Just about every industry relies on major ports across the East Coast and Gulf Coast to deliver shipments of equipment, food, and supplies each day. Ports and facilities handling approximately 51% of the nation’s overall port capacity are affected by the walkouts, according to the Mitre Corporation.
As the union neared a strike against the companies, port authorities, and terminal operators represented by the USMX, cargo shipping companies began warning customers to adjust their plans ahead of the walkouts. Although some were likely successful, many companies are expected to be feeling the pain over the coming days.
“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 an advisory to customers late last week.
What products could be most affected by the strike?
Non-perishable goods are expected to languish at ports until action is taken. Tire companies such as Goodyear (GT) and Michelin (ML) rely heavily on the affected locations, as do automakers such as General Motors (GM) and Hyundai Motor Co. CNBC reported that Bob’s Furniture, Home Depot (HD), and Ikea are top importers at the East Coast and Gulf Coast ports.
The agricultural industry is also expected to be one of the industries hit the hardest by the walkouts.
Grocers and restaurants will likely have issues getting fresh fruit and vegetables, especially from areas in Central and South America, the longer that the strike persists. Seventy-five percent of the U.S.’s bananas, or more than 3.8 million metric tons, arrive at ports where the ILA works each year, according to the American Farm Bureau Federation (AFBF).
That’s in addition to almost 90% of imported cherries, 85% of canned food, 82% of hot peppers, and 80% of chocolate. A majority of the nation’s imports of beer, wine, whiskey, scotch, and rum also arrives in containers at the ILA’s ports, along with more than 100 other categories of food.
The walkouts will also affect the companies shipping products out of the country. Some 30% of U.S. waterborne agricultural exports, which collectively accounts for three-quarters of total U.S. agricultural exports by volume, are expected to be disrupted, according to the AFBF.
“[N]early 80 percent of waterborne exports of poultry leave East Coast ports, 56 percent of raw cotton, 36 percent of red meat, 30 percent of dairy products, and even six percent of soybeans, all go through those ports through containerized exports,” Daniel Munch, an economist at the AFBF, said last week.
What are people saying about the strike?
“I will cripple you and you have no idea what that means. Nobody does,” Daggett said in a video released by the union last month.
“These people today don’t know what a strike is,” Dagget said as he warned his union could “cripple” the U.S. economy. “Everything in the United States comes on a ship.”
“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” Daggett said in a statement Tuesday morning, adding “USMX owns this strike now” and “must meet our demands.”
“The strike is back,” Todd Vachon, the director of Rutgers University’s Labor Education Action Research Network, said Monday, pointing to the various labor actions taken by unions over the past few years. “Unions have always fought to make bad jobs into good jobs. And when those jobs come under threat, they will fight to save them.”
Thursday, the White House called for the parties to settle their differences and avert a strike, telling CBS News that senior officials from the Departments of Labor and Transportation were working to help move negotiations along. 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.
Although the White House and federal agencies have encouraged the ILA and USMX to meet at the bargaining table, President Joe Biden has signaled he won’t interfere with the workers’ strike. Under the Taft-Hartley Act, the president can impose an 80-day period where workers go back to work while negotiators work on a deal.
A 177-member-strong coalition of trade associations wrote to Biden weeks before the contract expired to ask him to invoke Taft-Hartley and avoid the strike. Suzanne Clark, the president of the U.S. Chamber of Commerce, said failing to intervene would be “unconscionable,” according to a Monday letter to the president.
“It’s collective bargaining,” Biden told reporters on Sunday. “I don’t believe in Taft-Hartley.”
— William Gavin and Rachel Dalloo contributed to this article.
