US Dockworkers Strike, Halting Half The Nation’s Ocean Shipping

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  • ILA strike is the first such action by the union since 1977
  • The strike could cost the economy an estimated $5 billion a day
  • Strike disputes include pay, terminal automation project issues
  • White House officials hope for a short strike, sources say
U.S. East Coast and Gulf Coast dockworkers began their first large-scale strike in nearly 50 years on Tuesday, halting the flow of about half the country’s ocean shipping, after negotiations for a new labor contract broke down over wages. The strike blocks everything from food to automobile shipments across dozens of ports from Maine to Texas, a disruption analysts warned will cost the economy billions of dollars a day, threaten jobs, and potentially stoke inflation, reports Reuters.

US dockworkers strike

US dockworkers strike
President Joe Biden and his administration have repeatedly said they will not use federal powers to end the strike, and on Tuesday pressured dockworker employers to bump up their contract offer to land a deal.

The sides are talking to each other, but there was no active bargaining late on Tuesday and the strike appeared to be headed into a second day, a person briefed on the talks said.
The International Longshoremen’s Association union, which represents 45,000 port workers, had been negotiating with the United States Maritime Alliance (USMX) employer group for a new six-year contract ahead of a midnight Monday deadline.

The ILA said it shut down all ports from Maine to Texas at 12:01 a.m. ET (0401 GMT) after rejecting USMX’s final proposal, adding the offer fell “far short of the demands of its members to ratify a new contract”.

The ILA’s leader, Harold Daggett, has said employers such as container ship operator Maersk (Maersk. CO), opened a new tab, and its APM Terminals North America have not offered appropriate pay increases or agreed to demands to stop port automation projects that threaten jobs.

The dispute is wedging labor-friendly Biden into a virtual no-win position, with Vice President Kamala Harris in a razor-thin race for the White House with Republican former President Donald Trump in the Nov. 5 election.

On Tuesday, Trump blamed the strike on inflation, which he said was caused by the Biden-Harris administration.

The strike, the ILA’s first major stoppage since 1977, worries businesses that rely on ocean shipping to export their wares or secure crucial imports. It affects 36 ports – including New York, Baltimore, and Houston – that handle a range of containerized goods from bananas to clothing to cars.

Transportation Secretary Pete Buttigieg on Tuesday called on the ocean carriers to withdraw surcharges they may impose in the wake of the strike. USMX declined to comment.

The walkout could cost the American economy roughly $5 billion a day, JP Morgan analysts estimate.

French shipping group CMA CGM, the world’s third-largest container shipper, on Tuesday issued a force majeure notice over the strike and said it may charge additional shipping fees for delayed vessels.

The National Retail Federation called on Biden’s administration to use its federal authority to halt the strike, saying the walkout could have “devastating consequences” for the economy.

Republicans, including Virginia Governor Glenn Youngkin, also called on Biden to end the strike, warning of its impact on the economy.

The U.S. Department of Agriculture said on Tuesday it does not expect significant changes to food prices or availability in the near term.

Grocery chain owner Ahold Delhaize (AD.AS), who opened a new tab also said it expected minimal short-term impact on its supply chain.
Backup plans
Hundreds of dockworkers demonstrated at a New York City area shipping terminal in Elizabeth, New Jersey, carrying signs and shouting slogans as music blared and vendors hawked food. Daggett arrived to rally them with cheers of “ILA all the way!”

“Everything that comes in this country comes from the containers of these ships that my men work. And I want the world to know it. Don’t come after us saying we’re greedy. Go after those greedy bastards that own these companies in Europe,” Daggett told reporters.
Retailers accounting for about half of all container shipping volume, along with other shippers, have been busily implementing backup plans to minimize the impact of the strike as they head into the winter holiday sales season.

Many of the big players rushed in Halloween and Christmas merchandise early to avoid any strike-related disruptions, incurring extra costs to ship and store those goods.

Retail behemoth Walmart (WMT.N), opens a new tab, and the largest U.S. container shipper, and membership warehouse club operator Costco (COST.O), opened a new tab and says they are doing everything they can to mitigate any impact.

Danish drugmaker Novo Nordisk (NOVOb.CO), opens a new tab, meanwhile, said it has workaround plans in place to minimize or prevent any disruption to its production, including by using air freight, CNBC reported on Tuesday, citing a company spokesperson.

Lars Jensen, CEO of shipping consultancy Vespucci Maritime, said the strike is unlikely to lead to any critical shortage but could raise costs for consumers if it is prolonged

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Source: Reuters