East and Gulf Coast dockworkers now on strike, halting key U.S. cargo shipments

A disruptive strike at ports along the East and Gulf Coasts began today as the International Longshoremen’s Association walked out, affecting 14 port authorities and key cargo shipments. The first strike since 1977, it halts the flow of goods ranging from bananas to beef, pork and poultry, to industrial materials, leading to potential shortages and price hikes.

The ILA is demanding a significant 77% wage increase over six years, while the United States Maritime Alliance late Monday offered last-ditch effort of a nearly 50% raise over six years, triple employer contributions to employee retirement plans, strengthen health care options, and retain the current contract language around automation and semi-automation. It hoped that offer would lead to resumption of collective bargaining.

The ILA rejected the offer and stated that its wage demands were still not being met. The union said in a statement sent on Monday morning that USMX “continues to block the path toward a settlement on a new Master Contract by refusing ILA’s demands for a fair and decent contract and seems intent on causing a strike at all ports from Maine to Texas.”

The Biden administration is urging both sides to reach an agreement, but federal intervention under the Taft-Hartley Act is unlikely. The Taft-Hartley Act grants a U.S. president the power to suspend a strike for an 80-day “cooling off period” in cases where “national health or safety” are at risk. ILA President Harold Daggett threatened an intentional worker slowdown in moving containers if the Biden administration forces the union workers back to the docks using the Taft-Hartley Act. “You’re better off sitting down and let’s get a contract and let’s move on with this,” he said.

Bargaining for a new six-year contract between dockworkers, represented by the ILA, and shipping companies and operators are represented USMX, started in February 2023. According to a 2020 report by the Waterfront Commission, the regulator that oversees New York Harbor, more than half of the longshoremen based there made $150,000 or more. The ILA is asking for a $5-an-hour raise for each of the six years of the new contract, which means the hourly rate could reach $69 by 2030, a 77% pay increase. The union is also asking for better benefits and opposing the use of automated technologies at ports.

Murky member figure: While the union says there are about 45,000 members covered by the contract, the USMX puts the number of port jobs closer to 25,000, with not enough jobs for all the workers in the union to work every day.

Impacts: For the week ended last Friday, nearly $14 billion in trade arrived at these ports, including New York/New Jersey, Baltimore, Norfolk, Virginia, Savannah, Georgia, Miami, New Orleans and Houston, with $2.7 billion in trade arriving on Friday alone. On average, it takes one week to clear out one day of a port closure. As much as 43% to 49% of total containerized goods entering the U.S are processed through ports on the East Coast and Gulf Coast.

A one-week strike would cost the U.S. economy about $2.1 billion according to an estimate Monday from the Anderson Economic Group, a Michigan research firm with expertise in estimating the cost of strikes and other disruptions. Most of that would be a $1.5 billion loss in value of some of the goods that wouldn’t be delivered on time, such as perishable goods. Transportation companies, including ship lines and ports, would lose $400 million, while striking workers and those who might be temporarily laid off, would lose $200 million in wages. Losses would start to accelerate the longer the strike continued, said Patrick Anderson, the president of AEG. “A strike lasting longer than a week will begin to impact retailers and manufacturers as supply chain movement grinds to a halt.” But he said estimates of $1 billion a day in losses are exaggerated, especially considering the preparations many shippers had made in advance of the strike deadline. To hit those numbers “you’d have to sink the ships… A strike at the port delays trade, but does not destroy it,” he said.