Thousands of workers at ports spanning the East and Gulf coasts have gone on strike for the first time in decades, threatening to snarl supply chain traffic as well as trigger shortages and higher prices in the lead-up to the presidential election and the holiday shopping season.
The work stoppage kicked off at 12:01 a.m. on Tuesday, after the International Longshoremen’s Association (ILA), a union representing some 85,000 workers, and the United States Maritime Alliance (USMX) neglected to reach an agreement on a new contract. The failed negotiations, in which the longshoremen demanded higher wages and job protections against automation, have left experts bracing themselves for consequences likely to echo across the American economy.
While consumers won’t initially feel much of an impact, that won’t stay the case if the strike persists.
J.P. Morgan estimated that a strike shutting down ports on the East and Gulf coasts could cost the economy $3.8 billion to $4.5 billion per day, with some of that recovered over time after normal operations resume.
“First and foremost, we can expect delays to market,” said Mark Baxa, president of the Council of Supply Chain Management Professionals. “And those delays depend on really what the commodities are and priorities at the ports and how quickly things move.”
Should the strike drag out more than a month, small businesses will be forced foot the bill for delays, which could, in turn, cause some goods to arrive late for peak holiday shopping season — potentially impacting delivery of things like toys and artificial Christmas trees, although most holiday retail goods have already arrived from overseas.
Shoppers could also see higher prices on a range of goods, everything from coffee and cars to fruits and vegetables. In fact, perishables, like bananas, face some of the biggest risk, given their short shelf lives and the potential for traffic jams at ports in the Eastern U.S., which could also snarl trade on the West Coast, where workers are represented by a different union.
Railroads have said they can rally and up the amount of freight they carry from the West Coast, but analysts said they won’t be able to move enough to make up for the closed Eastern ports.
The work stoppage is the result of a months-long impasse between the ILA union and the USMX, a shipping industry group representing terminal operators and ocean carriers. It involves at least 45,000 workers, across 36 ports, including those in Baltimore; Boston; Charleston, S.C.; Jacksonville, Fla.; Miami; Houston; Mobile, Ala.; New Orleans; Norfolk, Va.; Philadelphia; Savannah, Ga.; Tampa, Fla.; and Wilmington, Del. and New York/New Jersey.
At opening, the union proposed a 77% pay raise over the six-year life of the contract, with President Harold Daggett saying it’s necessary to make up for inflation and years of small raises. ILA members make a base salary of about $81,000 per year, but some can pull in over $200,000 annually with large amounts of overtime.
“USMX brought on this strike when they decided to hold firm to foreign-owned Ocean Carriers earning billion-dollar profits at United States ports, but not compensate the American ILA longshore workers who perform the labor that brings them their wealth,” Daggett said in a statement posted on social media. “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.”
A White House official said Monday that, at President Joe Biden’s direction, the administration has been in regular communication with the ILA and the alliance to keep the negotiations moving forward. The statement came a day after the president told reporters he had no plans to intervene should dockworkers walk off the job.