Strike at US port leads to first shutdown in nearly 50 years

Tens of thousands of longshoremen are on indefinite strike at ports across much of the U.S., threatening major trade and economic disruptions ahead of the presidential election and the busy holiday shopping season.

Members of the International Longshoremen’s Association (ILA) left 14 major ports on the East and Gulf Coasts on Tuesday, halting container traffic from Maine to Texas.

The move marks the first such closure in nearly 50 years.

President Joe Biden has the authority to suspend the strike for 80 days for further negotiations, but the White House has said he has no plans to take action.

The talks have been on hold for months and the current contract between the parties expired on Monday.

The White House said President Biden and Vice President Kamala Harris would closely monitor the strike.

“The president has instructed his team to convey his message directly to both sides that they must sit at the table and negotiate in good faith – fairly and quickly.”

The two sides are fighting over a six-year framework agreement that includes around 25,000 port workers They are engaged in container and roll-on/roll-off operations, according to the US Maritime Alliance, known as USMX, which represents shipping lines, port associations and marine terminal operators.

On Monday, USMX said it had increased its offer, which would result in a nearly 50% increase in wages, a tripling of employer contributions to pension plans and a boost to health care.

Labor leader Harold Daggett has called for significant wage increases for his members while raising concerns about the threat of automation.

USMX accused the union of refusing to negotiate and filed a complaint with labor regulators asking them to refer the union back to the bargaining table.

In the previous contract, starting wages ranged from $20 to $39 per hour, depending on the worker’s experience. In addition, employees receive other benefits, such as bonuses related to container trading.

Mr. Daggett has stated The union wants hourly wages to increase by $5 per year over the life of the six-year contract, which it estimates is about 10% per year.

The ILA said workers are owed after shipping companies’ profits soared during the Covid pandemic while inflation hit salaries. It has warned to expect a major strike by its members, including those not directly involved in the dispute, although the exact numbers are unclear.

The union said it represented more than 85,000 people; It had around 47,000 active members its annual report to the Ministry of Labor.

The goods that are likely to be affected first are time-critical imports such as food.

According to the Farm Bureau, participating ports handle about 14% of agricultural exports shipped by sea and more than half of imports, including a significant portion of trade in bananas and chocolate.

Other sectors facing disruption include tin, tobacco and nicotine, according to Oxford Economics. Apparel and shoe companies and European automakers, which handle many of their shipments through the Port of Baltimore, will also be affected.

U.S. imports rose sharply over the summer as many companies took steps to speed up shipments ahead of the strike.

“I don’t think we’ll see any immediate, significant economic impact… but if the strike continues as long as the weeks go by, we may start to see an increase in prices and there may be some shortage of goods,” said he Seth Harris, a professor at Northeastern University and former White House labor adviser.

More than a third of exports and imports could be affected by the strike, hurting U.S. economic growth by at least $4.5 billion in each week of the strike, according to Grace Zemmer, associate U.S. economist at Oxford Economics, though Other estimates have also assumed that the economic damage could be higher.

She said more than 100,000 people could be temporarily out of work as the impact of the loss of work spreads.

“This is truly a triggering event that will cause dominoes to fall in the coming months,” said Peter Sand, chief analyst at ocean freight analytics firm Xeneta, warning that the standoff could also potentially drive up shipping costs.

That would hit consumers and businesses that tend to rely on so-called “just-in-time” supply chains for goods, he added.

The standoff marks the first time the ILA has gone on strike since 1977, bringing uncertainty to the U.S. economy at a sensitive time.

The economy is slowing and the unemployment rate is rising as the US election approaches in six weeks.

The strike risks putting President Biden in a difficult position.

US presidents can intervene in labor disputes that threaten national security by imposing an 80-day cooling-off period, forcing workers to return to work while negotiations continue.

In 2002, Republican President George W. Bush intervened to open ports after West Coast longshoremen represented by another union went on strike for 11 days.

The U.S. Chamber of Commerce business group has called on President Biden to act.

“Americans experienced the pain of delays and shortages during pandemic-era supply chain backlogs in 2021. It would be unreasonable to allow a contract dispute to cause such a shock to our economy,” said Suzanne P. Clark, President and Chief Executive Officer of the group of companies.

The ILA’s Mr. Daggett supported Democrat Biden in 2020 but has been critical of the president more recently, citing pressure on West Coast longshoremen to reach a deal a year ago. He met with Donald Trump last year.

Although any strike chaos will likely hurt Democrats, the cost of alienating allies in the labor movement would be higher just weeks before the election, said William Brucher, a professor of labor studies and industrial relations at Rutgers University.

But public support for strikes could be tested by the dispute Mr Daggett has championed. who was acquitted in a 2004 federal prosecutor’s case regarding ties to organized crime. A related civil lawsuit remains unresolved.

Films such as the classic 1954 crime drama “On the Waterfront,” starring Marlon Brando, once shaped the union’s image, but Prof. Brucher said he believes historical memory has largely faded and many people are aware of longshoremen’s concerns about the cost of living and Share automation.

“As much as it might influence public opinion against the ILA, a strike by ILA members is their decision and I do not believe they will be influenced by public opinion in any significant way,” he said.

“What is more likely is that the pressure of a strike will likely force employers to come back to the table with a much larger offer.”