With tens of thousands of union dockworkers set to strike at East and Gulf Coast ports starting Tuesday, here is an overview of the labor dispute and its potential impact on the U.S. economy.
Who is striking?
The International Longshoremen’s Association (ILA) is the union organizing the upcoming strikes.
Founded in 1877 as the Association of Lumber Handlers, the ILA states on its website that the union today represents upwards of 85,000 longshoremen on the U.S. East and Gulf coasts, the Great Lakes, major U.S. rivers, Puerto Rico, eastern Canada, and the Bahamas. It is the largest union of maritime workers in North America.
Why a strike?
The threat of an ILA strike comes as the union and the United States Maritime Alliance (USMX) negotiate for a new master contract agreement. The USMX represents employers of the East and Gulf Coast longshore industry, and the master contract guides subsequent local agreements at 14 East and Gulf Coast ports.
ILA demanded the new contract include a significant wage increase, a higher starting wage and premier health care benefits. Those negotiations seemingly deadlocked last Thursday after USMX filed an Unfair Labor Practice (ULP) with the National Labor Relations Board requesting injunctive relief.
“USMX filing these charges four days before the expiration of the current Master Contract clearly illustrates what poor negotiating partners they have been,” the ILA said in a news release. “If it wasn’t for the ILA engaging in serious and productive negotiations, most of the local agreements would not have been settled over the past year.”
What’s the impact?
Reuters reports the port strike could cost the U.S. economy as much as $5 billion per day.
The situation could also prove a bane for businesses going into the busy holiday shopping season, though retailers have accelerated imports in recent months to prepare for this. Over 170 organizations representing a variety of industries impacted have called on the White House to bring both parties back to the negotiating table and avoid a strike.
One of those organizations, the Retail Industry Leaders Association (RILA), includes over 200 retailers, product manufacturers and service suppliers accounting for more than $2.7 trillion in annual sales.
RILA stated in a news release last Tuesday that retailers are increasingly concerned about the negative impacts the strike would have on supply chains and the U.S. economy.
“The ripple effects of a strike — port congestion, vessel delays and missed shipments, increased shipping costs, inventory challenges, and more — all amount to yet another round of supply chain disruption and uncertainty,” the RILA release stated. “Given the current contract expiration date has been on the calendar for years, retailers view this strike and its imminent disruption as a self-inflicted wound to the U.S. economy. It is unfortunate that talks were seemingly stalled to prepare for a strike rather than to continue forward and find a solution. And although retailers have already activated contingency plans to help mitigate its effects, the longer a work stoppage goes on, the harder it will be to do so.”
President Joe Biden has reportedly refused to intervene in the strike, leaving it up to negotiators from both parties to reach an agreement.
Jess Dankert, RILA’s vice president of supply chain, told FreightWaves in an emailed statement that retailers foresaw this potential disruption for months and have in most cases already activated contingency plans to shield consumers from immediate impacts.
“That said, the longer a work stoppage goes on, the harder it will be for industries like retail to navigate the disruption and absorb the cost,” Dankert said. “On average, around half of U.S. container traffic passes through East and Gulf Coast ports, including millions of dollars of retail merchandise every day. Experts have estimated each day of strike represents about a $5 billion hit to the broader economy. The ripple effects will be more pronounced, and we’ll start to see things like delayed shipments, higher shipping costs, etc. — even possible stockouts — if the disruption is prolonged.”
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