Containers are stacked at the Port of Newark, as seen from New York City on September 30, 2024. A massive strike began at midnight, shutting down ports along the East and Gulf Coast, as members of the International Longshoremen's Association continued to press wage and other demands against the American Maritime Union, which controls many ports across the country.
Spencer Pratt | Getty Images News | Getty Images
Members of the International Longshoremen's Association (ILA) went on strike just after 12:01 pm ET on October 1, bringing billions of dollars of trade to ports along the U.S. East Coast and Gulf Coast to an abrupt halt. The union, which has about 50,000 of its 85,000 members, followed through on a threat to strike at 14 ports subject to a just-expired master contract with the United States Maritime Alliance (USMX), and picket workers began showing up at the ports. Unions and port ownership groups failed to reach agreement on a new contract by midnight in a protracted battle over wage increases and the use of automation.
On Monday, in a last-ditch effort to avert a strike that, if prolonged, would have caused significant damage to the U.S. economy — costing at least hundreds of millions of dollars a day at the largest ports like New York/New Jersey — the USMX Prevent strikes. A nearly 50% wage increase over six years was rejected by the ILA, according to sources with knowledge of the negotiations. The port ownership group said it hoped the proposal would lead to the resumption of collective bargaining.
The 14 ports are Boston, New York/New Jersey, Philadelphia, Wilmington, North Carolina, Baltimore, Norfolk, Charleston, Savannah, Jacksonville, Tampa, Miami, New Orleans, and Mobile and Houston.
“The first major Eastern longshoremen strike in 47 years began at ports from Maine to Texas, including New York,” New York Governor Kathy Hochul said in a statement issued shortly after midnight. The Port Authority and the New Jersey Port Authority ensure fair agreements for the flow of commerce through us.
In the weeks leading up to the strike, rhetoric from the ILA leadership had been aggressive, with ILA president Harold Daggett telling rank-and-file members that he was a member of the union during the last strike in 1977 and that rank-and-file members were unanimous Vote to authorize strikes – in a recent video message, “We will crush them.”
Right now, it’s the supply chain and the U.S. economy that are taking a direct hit.
Shana Wray, chief solutions architect at supply chain intelligence company FourKites, told CNBC that the strike came at the worst possible time and had an impact on supply chain congestion, exacerbating the damage caused by Hurricane Helene.
“Heron caused delays in the opening of the ports of Charleston and Savannah, as well as outages at intermodal facilities in Savannah, Charleston and Atlanta,” Ray said. “This caused disruptions to shipping, trucking and rail at Southeast and Gulf ports. Transport congestion.”
Economists and logistics executives say the impact of the strike depends on how long the shutdown lasts.
“A week or two of disruption will create some backlog, but outside of a few very port-reliant areas like Savannah, the broader “The impact will be minimal, but any longer will lead to shortages and upward pressure on prices,” he said.
Cummings said the food and automotive industries will face the most significant problems because they are particularly heavily reliant on ports that will be closed. While the likelihood of a spike in inflation is slim even if the strike lasts longer, even a modest reacceleration could create uncertainty and force the Fed to be more cautious in cutting interest rates, which would weigh on job growth and The overall outlook for investment brings pressure.
A week-long strike could cost the U.S. economy $3.78 billion, according to a report Analysis by The Conference Boardand led to a slowdown in the supply chain in mid-November. Overall, the ports threatened by the strike handle $3 trillion in U.S. international trade annually.
Many industries are preparing for significant impacts. Noushin Shamsili, CEO and president of Nuco Logistics, which specializes in the import and export of pharmaceuticals, said the strike comes at a critical moment for the pharmaceutical industry to replenish inventories.
“Almost everything in this industry is on time,” Shamsiri said. “Raw materials are being shipped to complete the manufacturing of medicines. Medical supplies for clinics and hospitals are on these ships. For a while, importers were not importing large quantities of goods because of post-COVID-19 oversupply. Now they have started re-ordering medical equipment, gloves, syringes and pipes.
Shamsiri also said that east coast ports are gateways for generic drugs made in India. About 48% of the active pharmaceutical ingredients used in the United States are imported from India. Without these APIs, drugs cannot be produced. API is also produced in Europe, which also uses East Coast ports as points of entry into the United States.
Steve Lamar, executive director of the American Apparel & Footwear Association, said the ports are critical to the retail industry. He said that by 2023, Eastern and Gulf Coast ports will account for 53% of total U.S. imports of apparel, footwear and accessories, worth more than $92 billion.
“The clock is ticking,” Lamar said. “Each strike day creates an additional five days of disruption as our consumer-driven economy is mired in backlogs at ports during the holiday shopping season. Both sides need to get back to the negotiating table and the government must be prepared to use all its resources. “Achieving a fair, long-term and sustainable agreement is the top priority for all parties. “
Importers such as Walmart — the number one importer at the affected port — as well as other major importers including home depotIKEA, SamsungWith other unions closely united in support of the ILA's labor struggle, LG Electronics will have few options to shift trade to Canada or the West Coast.
The companies are among the main importers at 14 major ports that could be affected by the ILA strike, according to ImportGenius.
The last ILA strike was in 1977, when the ILWU union at West Coast ports supported the strike, allowing ILA members to travel to the Port of Los Angeles to prevent rerouted ships from unloading. ILA President Daggett, who was involved in these actions as a young union member, recently cited this historical example in an exchange with rank-and-file workers.
The ILA has also made it clear that all its members, including those not bound by expiring contracts, will be closing down the ranks. “What is certain is that the ILA's 85,000 members will support their brothers and sisters,” ILU spokesman James McNamara recently told CNBC.
Teamsters President Sean O'Brien issued a statement Monday night saying he “100 percent” supports the ILA in its fight for a new contract and reminded its members that the Teamsters will not cross picket lines. “Ocean carriers are on strike against themselves after failing to negotiate contracts that recognize the value of these workers,” O’Brien said. He added some harsh words Regarding any efforts by the federal government to intervene in industrial action.
The National Retail Federation said merchandise arriving on ships on and after Oct. 1 is being replenished with holiday merchandise and just-in-time products like auto parts and pharmaceuticals.
Between 43%-49% of total U.S. imports and billions of dollars in monthly trade are now locked in failed negotiations over a new union contract, which collapsed in June after the ILA accused the port of violating regulations related to its use. rule.
Since late last week, the White House has engaged with senior officials including Transportation Secretary Pete Buttigieg, Acting Labor Secretary Julie Sue, and National Economic Council Director Lael Brainard in an effort to get the ILA and USMX back Negotiations were held at the bargaining table and an agreement was quickly reached.
Late Monday, USMX issued a statement saying it had made counteroffers with the union over the past 24 hours, including a nearly 50% wage increase over six years, a tripling of employer contributions to employee retirement plans, and proposals to strengthen the union. etc.
The union said in a statement released at 11 a.m. ET on Monday, “Ocean carriers represented by USMX hope to enjoy the billions of dollars in lucrative profits they will earn in 2024 while they provide ILA longshoremen with “Unacceptable wage package, we refuse to do it.” The statement added that the union believes USMX “intends to initiate strikes at all ports from Maine to Texas within nearly 12 hours.”
The Biden administration finds itself in a delicate political moment, a month before the presidential election, with President Biden vowing that he will not use existing labor laws to force union workers back to work, according to Taft-Hart Bill of Rights, which falls within his powers.
The Taft-Hartley Act, passed in 1947, was a revised version of U.S. laws governing industrial relations and union activity that empowered the U.S. president in the event of a threat to the “national health or security.”
The White House has reiterated its position multiple times in recent days that “we have never invoked the Taft-Hartley Act to stop a strike and are not considering doing so now.”
Cruise ship operations and port military operations will continue.