Port Strike Could Cost the US Billions: Here’s What to Know

A container ship departs the Port of Newark for the Atlantic Ocean on Sept. 30, 2024. Spencer Platt/Getty Images

U.S. East Coast and Gulf port workers went on strike on Oct. 1, halting the flow of about half the nation’s ocean shipping after negotiations for a new labor contract broke down over wages.

The International Longshoremen’s Association (ILA) union, which represents about 45,000 port workers, was negotiating with the U.S. Maritime Alliance (USMX) employer group for a new six-year contract ahead of the deadline, which expired at midnight on Sept. 30.

The ILA on Tuesday morning confirmed in a statement that it shut down all ports stretching from Maine to Texas, starting at 12:01 a.m. ET. It rejected USMX’s final offer and said that it fell “far short of the demands of its members to ratify a new contract.”

Billions Per Day

The National Association of Manufacturers trade group, which wants the U.S. government to intervene, warned that billions of dollars are at risk—daily.

Estimates from the organization show that the strike “would jeopardize $2.1 billion in trade daily” and the total damage would reduce the United States’ gross domestic product by $5 billion per day, the group’s CEO, Jay Timmons, said in a statement.

Illustration by The Epoch Times, Shutterstock

It noted that major imports that pass through Gulf and East Coast ports include 77 percent of coffee and tea, 77 percent of beverages and spirits, and 58 percent of medical and surgical instruments.

In terms of exports, 62 percent of fertilizers, 76 percent of vehicles, 78 percent of wood pulp used in Europe for heat and other commodities, and 62 percent of medical and surgical instruments pass through those ports, the manufacturing group said.

Union’s Demands

The ILA has demanded a $5 per hour wage increase for each year of a six-year agreement with the USMX. It also is demanding a ban on automation or semi-automation.

“Deceiving the public with misleading calculations is not going to help get an agreement with the ILA,” ILA President Harold Daggett said in a statement issued last month by the union. “Even a $5.00 an hour increase in wages for each year of a six-year agreement, only amounts to an average annual increase of approximately 9.98 percent.”

On Tuesday, Daggett again reiterated the demand of “$5 an hour increase in wages for each of the six years” in the new contract.

“Plus, we want absolute airtight language that there will be no automation or semi-automation, and we are demanding all Container Royalty monies go to the ILA,” he said.

USMX’s Response

The USMX, a port ownership group, has said that it has proposed several wage-related offers. It added that it is hopeful that the counteroffers would resume collective bargaining on other outstanding issues to reach an agreement.

“Our offer would increase wages by nearly 50 percent, triple employer contributions to employee retirement plans, strengthen our health care options, and retain the current language around automation and semi-automation,” the USMX said in a statement hours ahead of the deadline.

Previously, the USMX filed an unfair labor practice with the National Labor Relations Board asking for immediate relief, meaning that the union would have to keep bargaining until a deal is hashed out. The request to the board was made just four days before Tuesday morning’s strike.

Ports Affected

The ports that would be affected by the shutdown include Baltimore and Brunswick, Georgia, considered the top two busiest auto ports; Philadelphia, which gives priority to fruits and vegetables; and New Orleans, which handles coffee, mainly from South America and Southeast Asia, various chemicals from Mexico and North Europe, and wood products such as plywood from Asia and South America.

Other major ports affected include Boston; New York and New Jersey; Norfolk, Virginia; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Florida; Mobile, Alabama; and Houston.

New York Gov. Kathy Hochul issued a statement saying the two sides should come to the negotiating table to finalize an agreement to keep shelves stocked.

“In preparation for this moment, New York has been working around the clock to ensure that our grocery stores and medical facilities have the essential products they need,” she said.

“It’s critical for USMX and the ILA to reach a fair agreement soon that respects workers and ensures a flow of commerce through our ports. In the meantime, we will continue our efforts to minimize disruption for New Yorkers.”

Shortages Possible

A lengthy shutdown could raise prices on goods around the country and potentially cause shortages and price increases at big and small retailers alike as the holiday shopping season approaches.

It could also mean lost export sales of key agricultural products including beef, pork, chicken, and eggs.

“First and foremost, we can expect delays to market. And those delays depend on really what the commodities are and priorities at the ports and how quickly things move,” said Mark Baxa, president of the Council of Supply Chain Management Professionals.

But the length of the work stoppage will determine the impact on consumers and businesses across the United States, said Jason Miller, the interim chair of Michigan State University’s Supply Chain Management department. But the automotive industry might be especially hit hard, he said.

“We bring in around 2 million metric tons of auto parts in containers alone just in those ports [affected by a potential strike]. It’s an incredible amount, and when you start looking at the German automotive makers, they bring a lot in from Germany to their plants in South Carolina and Alabama through the Gulf Coast,” Miller told The Epoch Times last week.

“There is no alternative strategy in place. You can’t put the parts in a plane and truck it down from Canada.”

Will Biden Intervene?

With the federal Taft-Hartley Act, presidents can take executive action in labor issues that threaten U.S. national security by imposing an 80-day period that would have workers show up and perform their jobs.

Manufacturers have called on the Biden administration to intervene in the matter, asking President Joe Biden to invoke the 1947 Taft-Hartley Act to stop the strike. That includes the National Association of Manufacturers, which released a statement hours before the dock workers walked off the job.

“There will be dire economic consequences on the manufacturing supply chain if a strike occurs for even a brief period,” the group’s CEO said in the statement.

But Biden has said that he will not intervene, telling reporters on Sunday that “it’s collective bargaining” and that he does not “believe in Taft-Hartley.”

On Monday, White House press secretary Karine Jean-Pierre echoed his comments.

“I know there’s a question about the Taft-Hartley. We have never invoked the Taft-Hartley to break a strike and are not considering to do so now,” she said at a press briefing.

Biden Urges Negotiations Instead

Biden, in a statement at around noon on Tuesday, said that he believes “collective bargaining” is the way to bring the strike to an end and appeared to focus on the USMX over the ILA.

“I have urged USMX, which represents a group of foreign-owned carriers, to come to the table and present a fair offer to the workers of the International Longshoremen’s Association that ensures they are paid appropriately in line with their invaluable contributions,” he said.

Claiming that carriers have made “record profits” in recent years, Biden said that “dockworkers will play an essential role in getting communities the resources they need” following the devastation of Hurricane Helene several days ago.

“Executive compensation has grown in line with those profits and profits have been returned to shareholders at record rates. It’s only fair that workers, who put themselves at risk during the pandemic to keep ports open, see a meaningful increase in their wages as well,” he also stated.

Costco CEO Responds

The chief executive of Costco said that the company is taking or has taken a wide variety of steps to deal with possible disruptions caused by the port strike. Contingency plans in place include pre-shipping some products to get in holiday goods early and preparing to use different ports, Costco CEO Ron Vachris said on the company’s fourth-quarter earnings call last week.

“We’ve cleared the ports, we’ve pre-shipped. We’ve done several different things that we could to get holiday goods in ahead of this time frame, and looked at alternate plans that we could execute with moving goods to different ports and coming across the country if needed,” Vachris said.

“It could be disruptive, but how impactful, I can’t tell you ... until we know what could happen out there.”

The Associated Press and Reuters contributed to this report.