Posted on 10/01/2024 2:58:52 AM PDT by Red Badger
Key Points
Approximately 50,000 ILA union longshoremen were walking off the job at East Coast and Gulf Coast ports from New England to Texas starting at 12:01 a.m. ET on October 1 after failing to reach an agreement with ports ownership on a new contract, the union’s first strike since 1977.
Between 43%-49% of all U.S. imports and billions of dollars in trade monthly move through the U.S East Coast and Gulf ports.
The International Longshoreman’s Association, the largest maritime union in North America, rejected an offer from the port management group USMX on Monday that included a wage hike over six years near 50%.
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Billions in trade came to a screeching halt at U.S. East Coast and Gulf Coast ports after members of the International Longshoremen’s Association (ILA) began walking off the job after 12:01 a.m. ET on October 1. The ILA is North America’s largest longshoremen’s union, with roughly 50,000 of its 85,000 members making good on the threat to strike at 14 major ports subject to a just-expired master contract with the United States Maritime Alliance (USMX), and picketing workers beginning to appear at ports. The union and port ownership group failed to reach agreement by midnight on a new contract in a protracted battle over wage increases and use of automation.
In a last-ditch effort on Monday to avert a strike that will cause significant harm to the U.S. economy if it is lengthy — at least hundreds of millions of dollars a day at the largest ports like New York/New Jersey — the USMX offered a nearly 50% wage hike over six years, but that was rejected by the ILA, according to a source close to the negotiations. The port ownership group said it hoped the offer would lead to a resumption of collective bargaining.
The 14 ports where preparations for a strike have been underway are Boston, New York/New Jersey, Philadelphia, Wilmington, North Carolina, Baltimore, Norfolk, Charleston, Savannah, Jacksonville, Tampa, Miami, New Orleans, Mobile, and Houston.
New York Governor Kathy Hochul said in a statement issued shortly after midnight that “the first large-scale eastern dockworker strike in 47 years began at ports from Maine to Texas, including at the Port Authority of New York and New Jersey. 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.”
Rhetoric from ILA leadership has been aggressive in the weeks leading up to the strike, with ILA president Harold Daggett, who was a union member the last time it went out on strike in 1977, telling rank-and-file members — who unanimously voted to authorize a strike — in a recent video message, “We’ll crush them.”
In a video posted to an ILA Instagram account, Daggett addressed union workers at Maher Terminals in Elizabeth, New Jersey. “This is going down in history, what we’re doing here,” he said. “They can’t survive too long,” he added.
For now, it is the supply chain and U.S. economy which will take the immediate hit.
Shana Wray, principal solutions architect for supply chain intelligence firm FourKites, tells CNBC the strike comes at the worst possible time, with its impact on supply chain congestion to exacerbate the devastation left behind from Hurricane Helene.
“Helene caused ports to delay openings at the ports of Charleston and Savannah, as well as power losses at intermodal facilities in Savannah, Charleston, and Atlanta,” said Wray. “This created ocean, trucking, and rail carriers congestion across Southeast and Gulf ports.”
Logistics experts have told CNBC in recent months there has been an exodus of cargo from the East to West Coast, and companies moved up orders for peak shipping season due to the strike risk. Both economists and logistics executives say the impact of the strike depends on how long the work stoppage lasts.
“A disruption of a week or two will create some backlogs but the broader consequences will be minimal outside of a handful of very port-reliant areas, including Savannah,” said Adam Kamins, economist at Moody’s Analytics. “But anything longer will lead to shortages and upward price pressures,” he said.
The most significant issues would be faced by food and automobile industries, Kamins said, as they rely especially heavily on the ports that will be shut down. While a surge in inflation is highly unlikely even with a longer strike, even a modest reacceleration could create uncertainty and force the Federal Reserve to be more cautious about lowering interest rates, which would weigh on the overall outlook for job growth and investment.
A one-week strike could cost the U.S. economy $3.78 billion, according to an analysis by The Conference Board, and cause supply chain slowdowns through mid-November. In all, the ports threatened with strikes handle $3 trillion annually in U.S. annual international trade.
Many industries are preparing for major repercussions. Noushin Shamsili, CEO and president of Nuco Logistics, which specializes in pharmaceutical imports and exports, said the strike comes at a critical time for inventory replenishment for the pharma sector.
“Almost all of this industry is just on time,” said Shamsili. “Raw materials are being brought in to complete drug manufacturing. Medical supplies for clinics and hospitals are on these vessels. For a while importers did not bring in a lot of cargo because they were overflowing with supplies post-Covid. Now they have started reordering medical devices, gloves, syringes, and tubing.”
Shamsili also said the East Coast ports are a gateway for generic medicine made in India. Approximately 48% of the active pharmaceutical ingredients used in the U.S. are being imported from India. Without these APIs, medications cannot be produced. APIs are also manufactured in Europe, which also use the East Coast ports as U.S. points of entry.
Steve Lamar, CEO of the American Apparel and Footwear Association, said these ports are critical for the retailing industry. In 2023, the East and Gulf Coast ports accounted for 53% of all U.S. apparel, footwear, and accessories imports, he said, amounting to over $92 billion in value.
“The clock is ticking away,” said Lamar. “Each strike day yields five more days of disruption as our consumer-driven economy gets snarled in port backlogs right as we hit the heavy holiday shopping season. Both sides need to get back to the table and the administration must be ready to use all of its tools to make sure this happens. Reaching a fair, long-term, and sustainable deal is job No. 1 for all parties.”
Importers such as Walmart — the No. 1 importer across the affected ports — as well as other top importers including Home Depot, Ikea, Samsung, and LG Electronics will find few to no options to divert trade to Canada or the West Coast as other unions close ranks in support of the ILA’s labor battle.
These companies are among the leading importers at the 14 major ports that an ILA strike would impact, according to ImportGenius data.
The last time the ILA went on strike in 1977 the ILWU union at West Coast ports supported it by allowing ILA members to go to the Port of Los Angeles to stop the unloading of diverted vessel. ILA president Daggett, who was involved in those actions as a young union member, recently cited this historical example in communications with the rank-and-file.
The ILA has also made clear that all of its members, including those not subject to the expired contract, will be closing ranks. “You can be sure the ILA’s 85,000 members will be supporting their Sisters and Brothers,” James McNamara, spokesman for the ILU, recently told CNBC.
The Teamsters issued a statement on Monday night from its president Sean O’Brien saying it stood “100%” with the ILA in the fight for a new contract and reminding its members that Teamsters do not cross picket lines. “The ocean carriers are on strike against themselves after failing to negotiate a contract that recognizes the value of these workers,” O’Brien stated, and he added some harsh words about any effort by the federal government to interfere in the labor action.
The National Retail Federation has said items on the vessels en route for October 1 arrival and after are restocking items for the holidays as well as just-in-time products like auto parts and pharmaceuticals.
Between 43%-49% of all U.S. imports and billions of dollars in trade monthly are now caught up in the failed talks over a new union contract, which broke down in June amid allegations from the ILA that ports were violating rules related to use of automation.
The White House has engaged senior officials including Secretary of Transportation Pete Buttigieg, Acting Secretary of Labor Julie Su, and Director of the National Economic Council Lael Brainard since late last week in an effort to bring the ILA and USMX back to the bargaining table to negotiate a deal quickly.
Late in the day on Monday, USMX put out a statement saying within the past 24 hours it had traded counter offers with the union, including an offer to increase wages by nearly 50% over six years, triple employer contributions to employee retirement plans, strengthen health care options, and retain the current contract language around automation and semi-automation.
The union had already said in statement issued at 11 a.m. ET on Monday that “the Ocean Carriers represented by USMX want to enjoy rich billion-dollar profits that they are making in 2024, while they offer ILA Longshore Workers an unacceptable wage package that we reject.” The statement added that the union saw the USMX as “intent on causing a strike at all ports from Maine to Texas beginning in almost 12 hours.”
The Biden administration finds itself in a delicate political moment, with the presidential election one month away and President Biden vowing he will not use existing labor law to force union workers back on the job, which is within his powers under the Taft-Hartley Act.
The Taft-Hartley Act, passed in 1947, was a revision of U.S. law governing labor relations and union activity that granted a U.S. president the power to suspend a strike for an 80-day “cooling off period” in cases where “national health or safety” are at risk.
The White House has reiterated its position several times in recent days that “We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now.”
Cruise operations and military operations at ports will continue.
They aren’t government workers............
I'm sorry man, that sucks and that's not fair - sometimes one's position does get overrun despite our preparations.
But God is not blind - people are praying for you and the Church is en route with help.
Yes, we have no bananas….we have no bananas today…..
Come Mr. tallyman tally me banana............
Mayor Pete has it under control! No worries.
Call out the NG! Do what Reagan did with the ATC.
Crane operators make more than $300,000 - with the increase it will be over $500,000.
Just throwing lines merits over $100K now. Back when this mean that when a ship was due at a certain dock, the particular union workers left the hall, went to the dock in question, grabbed the throw line, put the mainline on a cleat, and returned to the hall. 4 days a week. $100K
No Dem politician will do anything, since they are all in the pocket of this union (as one might expect). The MSN will follow suit, likely to the extent that when grocery store shelves become empty, they will deny it, citing some rigamarole or another.
They aren’t government workers............
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The make far more than any 2 government workers and work less.
I learned everything I need to know about the docks from season 2 of The Wire.
Time to union-bust.
The optics of this will be bad, especially if it lasts until election day.
Well, I’m glad to see Pete is “on the job!” Maybe if he would quit posting junk on Twixxer and “work his magic” we could have avoided this. However part of me thinks this is planned and part of the strategy for the “October Surprise..”
The problem is far, far bigger than just the union.
The United States does not control operations at many of our major ports.
Thanks for posting. BUMP!
The longshoremen today get paid very well. That’s because they’re the only ones left as the industry has downsized continuously over the last 50+ years. Paying one guy $300,000/year seems ridiculous until you understand that he used to be 15 guys making $50,000/year each.
Been on a history trip in gorgeous (but insane) Boston, and returning home to CA today. So, sorry for the inconvenience for those here on the East Coast, but remember it’s in a good cause of it persists long enough to effect the election. That said, I’d bet money the administration pulls a statutory rabbit out of the hat to temporarily get the workers back on the job, though Biden’s labor masters have told him not to do that. On the other hand, fixing this is in Buttigieg’s portfolio, so maybe it’s more likely than they’ll f it up.
Head of the ILA union sounds like a gangster who enjoys his power - https://x.com/indygerl/status/1840790393291682260
“I will cripple you”
ILA president Harold Daggett: “This is going down in history, what we are doing here.” “They can’t survive too long.”
Supply chain disruption is never good for the incumbent party in an election.
Stock up on ......EVERYTHING!....................
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