UPDATE - 10/1/2024: The strike did, in fact, begin overnight, affecting operations at 36 East Coast and Gulf Coast ports.
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As the final hours of September tick away, so too do the final hours of the labor agreement between International Longshoreman's Association (ILA) dockworkers and the U.S. Maritime Alliance (USMX), which represents East Coast and Gulf Coast ports. As negotiations have been largely at a standstill for a few months, the expectation is the roughly 45,000 ILA union workers will go on strike as the deal expires, bringing cargo activity at busy ports including New York/New Jersey, Savannah, New Orleans and Houston among others to a standstill. What will it mean for supply chains if a strike, especially a prolonged stoppage, occurs? Let's go over all the particulars.
The strike of ILA dockworkers at East Coast ports (and Gulf Coast ports) is expected to begin at midnight (as October begins) upon the expiration of the union's current contract with the USMX - which represents shipping lines, port authorities and terminal operators. This date has long been circled on the calendar, as strike concerns began percolating in earnest about a year ago, with continued acrimony between both sides in the ensuing months. Such a strike would be the first affecting these ports in 47 years.
The chance of government intervention to prevent a work stoppage always looms, as evidenced by examples both in the U.S. and north of the border in recent times. So far though, President Biden said as recently as yesterday that he would not intervene, instead encouraging collective bargaining. However, the administration has tools at its disposal - both involving official action and simply increasing involvement in the talks.
On the official side, there's the Taft-Hartley Act, which could lead to a court-ordered 80-day cooling off period. But Biden offered a flat "no" to reporters on whether he'd invoke the act, saying he doesn't "believe in Taft-Hartley." On getting involved in negotiations, that's already happened to a degree. The White House indicated senior officials have been in touch with both sides, encouraging a return to the negotiating table and stressing the need for a fair agreement to be reached "fairly and quickly." The union for its part, has said it isn't interested in federal mediation or help from the Labor Department in negotiations.
While observers believe the Administration won't step further in right away, there is strong sentiment that the stance would change the longer a work stoppage goes on. It's already under pressure from industry groups to act, and actual economic pressure would grow if the ports were shutdown for any length of time - pressure that would only be amplified as the presidential election approaches.
In the early days of an East Coast port strike, economic pressure would likely go unnoticed as businesses have prepared for the strike possibility for several months - shipping holiday inventory early and diverting some traffic to West Coast ports. Additionally, the union has indicated it will continue to handle military cargo and service passenger cruise ships even during an ongoing strike.
There's a big but to all of this, though, as economic pressure will quickly build the longer regular traffic is not coming through these major facilities. The Port of New York and New Jersey is the third largest by volume (and was even recently number one), while others are among the top 10 in the country handling both imports and exports. All told, they handle more than half of containerized imports and two-thirds of containerized exports.
Goods of all kinds flow through these facilities, including both food (perishable and non-perishable), beverages, furniture, appliances, electronics, and even cars. Additionally, raw materials arrive for finishing by U.S. manufacturers, including ingredients for food products and components for products. And of course, these are facilities key to exporting cargo as well, with diversions through the west coast unlikely to cover all needs.
While there are several issues preventing a new contract, the conflict between the ILA dockworkers and the USMX-represented ports largely boils down to two key components: raises and automation. On the pay front, some reports have the union looking for raises of 30% plus bonuses to put workers on par with last year's agreement affecting the west coast. Words like "generous," "landmark," and "big boost" have been used to describe what the ILA is aiming for.
Part of the ask is due to the ILA's desire to receive some of the profits shipping lines saw during the two-year plus pandemic boom, which saw shipping rates skyrocket and the industry clear in the neighborhood of $400 billion from 2020-2023. Even the White House in the "fairly and quickly" statement noted above, said the agreement should reflect "the success of the companies." Concerns about inflation reducing the current value of workers' pay have also been floated.
The other, and perhaps greater, sticking point, is automation - the reason the two sides haven't met in person since June. Then, the ILA called off a negotiating session when it said it discovered the use of an auto gate system at the Port of Mobile to process trucks. Traditional negotiations have yet to resume. The union is concerned USMX members are looking to automation to eliminate many of its workers' jobs. That concern is so great, that the ILA wants a complete ban on automation of gates, cranes and any container movement involving the loading or unloading of cargo.
The USMX offer to this point has been to maintain provisions in the current agreement that bar fully automated terminals, while adding a ban on semi-automated equipment in any new contract. However, the sides have already disagreed about the current status quo, as the June auto gate issue was considered a violation by ILA, while the shipping line said it was allowed.
At any rate, bridging the divide between the two sides is unlikely to happen immediately. So a strike is the expectation. It's all a question of both how it's resolved, and how long it takes to do so.
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