East and Gulf Coast Ports Strike as ILA, USMX Fail to Reach New Deal
At 12:01 a.m. Tuesday, dockworkers across the East and Gulf Coast ports officially went on strike, shuttering operations at 36 hubs from Maine to Texas and threatening a significant portion of U.S. trade.
Nearly two years after starting new contract negotiations on a local level, the International Longshoremen’s Association (ILA) and their port employers at the U.S. Maritime Alliance (USMX) were unable to come to an agreement on a new master contract for 45,000 union dockworkers at 14 of the ports. The prior deal expired Monday at midnight.
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The strike outcome has been in play since last November, when the ILA warned it would not work a day past its Sept. 30 contract deadline, giving many shippers a warning to pull forward goods throughout the summer to bring in holiday product or shift gears to the West Coast if they were aiming to cut it close.
“A lot of the major retailers have prepared for this, not just because of the strike, but also because of the general variability both in production and also shipments,” Ashley Hetrick, sourcing and supply chain segment leader at BDO USA, told Sourcing Journal. “What’s going to start to be really tough is going to be those mid-tier retailers that either were not able to secure access to those preferred routes, or were going to end up just outside of that unload window with containers that are stuck at sea, that there’s nothing they can do about those materials.”
With a strike, the question now remains if the Biden administration is going to intervene in the work stoppage. President Joe Biden has previously indicated that he will not invoke the Taft-Hartley Act, which would force the ILA to go back to work and return to the bargaining table with the USMX for another 80 days before a strike could occur. Senior officials at the White House have been in contact with both sides encouraging them to get back to the table and negotiate “in good faith.”
That tune could change in time depending on any potential hit to the economy, particularly in an election year in which Vice President Kamala Harris is running for the presidential seat.
Estimates for the economic impact of the strike vary widely, from the $540 million per day forecast by The Conference Board to estimates as high as $5 billion, according to analysts at J.P. Morgan.
“I think this is where you start to see the government playing a heavier hand, potentially because of the economic impacts of these potential disruptions,” said Douglas Kent, executive vice president of corporate and strategic alliances at the Association for Supply Chain Management (ASCM). “You’ve already seen Project FLOW, and some of these other government initiatives, either through regulatory or funding, trying to de-risk a situation which would have such a dire economic impact.”
Given the anticipated deluge of containers because of the work stoppage, even just one day of strike action is projected to require six days to clear the backlog, according to maritime trade advisory service Sea-Intelligence.
According to container shipment tracking solution Vizion, total scheduled imports affected represent 665,700 20-foot equivalent units (TEUs) or 60 percent of all future U.S. imports, or $21 billion in estimated cargo value.
The company’s analysis says Walmart relies on these U.S. ports for approximately 86 percent of its total U.S. imports. Data from eight East and Gulf Coast ports measured by ImportGenius seems to back this up, with Walmart measuring as the top importing retailer at 47,680 TEUs, followed by Ikea at 42,939 TEUs.
The types of imported cargo impacted the most including furniture, bedding and mattresses, with 54 percent of the volume for these products brought in through these ports, according to Vizion.
Top exported goods include plastics (80 percent of all U.S. plastics exported), wood pulp products (72 percent) and meat products (77 percent).
Even amid the strike concerns, vessels had continually made their way to the East Coast given the difficulties that rerouting to other ports would pose.
According to supply chain intelligence firm Kpler, 147 vessels (a combination of container ships and roll-on/roll-off vessels) are en route to the East and Gulf Coast ports by Oct. 1, with 38 of those vessels headed to the Port of New York & New Jersey.
The negotiation process has been contentious throughout the year, with the ILA pulling out of master contract talks in June due to concerns about an automated gate in the Port of Mobile. The union has been railing against automation for years, making it one of two major content points in the negotiations, and has reportedly sought a total ban on automated equipment across the ports.
Beyond automation, the union wants to improve the pay scale for its dockworkers, with six-year veterans making $39 an hour as of Oct. 1, 2023. The ILA has denied claims that it is seeking out a 77 percent increase in wages over the course of its next contract.
In a statement released 6 p.m. Monday, the USMX said it had traded counteroffers with the union related to wages in the 24 hours prior.
The port employers’ newest offer included nearly 50 percent wage increases, while tripling employer contributions to worker retirement plans, in addition to strengthened health care options. The ILA reportedly turned down the proposal.
In that offer, the USMX also sought to retain the current language around automation and semi-automation. Under those terms, the ports were not allowed to use fully automated terminals or equipment, with the technology defined as “machinery/equipment devoid of human interaction.”
Terms also require that the terminals didn’t implement semi-automated equipment or technology “until both parties agree to workforce protections and staffing levels.”
Ahead of the strike action, the ILA received a vote of support from another major national union, the International Brotherhood of Teamsters.
“The ocean carriers are on strike against themselves after failing to negotiate a contract that recognizes the value of these workers,” said Teamsters president Sean O’Brien. “Our ILA brothers and sisters play a critical role in keeping the American economy running, and they deserve industry-leading wages and robust job protections for the vital work they perform.”
The Teamsters, who recently refused to endorse a presidential candidate, have been against federal intervention in collective bargaining. The 1.3-million-member union advised the White House against getting involved in its contract negotiations with UPS last year, in which a strike was averted when a five-year deal was put in place.
“The U.S. government should stay the f–k out of this fight and allow union workers to withhold their labor for the wages and benefits they have earned,” O’Brien said. “Any workers—on the road, in the ports, in the air—should be able to fight for a better life free of government interference. Corporations for too long have been able to rely on political puppets to help them strip working people of their inherent leverage.”
The strike marks the first work stoppage on the East and Gulf Coasts since 1977.
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