The Specter of a Dockworkers' Strike Looms in the United States, the First Since 1977
A few weeks before the presidential election, tens of thousands of dockworkers are preparing to strike on Tuesday in the United States, after failing to reach an agreement in their negotiations over a new labor contract, risking disruption to international trade.
Talks, which began in May, have been stalled for several weeks, and according to the United States Maritime Alliance (USMX), which represents employers at major ports on the East Coast and Gulf of Mexico, the dockworkers’ union (ILA) refuses to return to the negotiating table.
On Thursday, the Alliance appealed to the National Labor Relations Board (NRLB), requesting "an immediate injunction—forcing the union to resume talks." They also accused the union of engaging in unfair labor practices.
However, the union seems determined to strike as soon as the current contract expires at 11:59 p.m. on Monday (03:59 GMT Tuesday), as the "financial proposals are unacceptable." The union is also demanding assurances against automation.
Imports of Central American Bananas Could Be Disrupted by a U.S. Dockworkers' Strike
This walkout, the first since the 44-day strike in 1977, would involve tens of thousands of ILA members—among its 85,000 members across 36 ports—working at container terminals and roll-on/roll-off vehicle loading facilities in ports along the coast from Maine (northeast) to Texas (south), along the Gulf of Mexico, including Florida (southeast).
The labor contract covers 25,000 ILA members working at fourteen ports (including Boston, Philadelphia, Baltimore, Savannah, Miami, Tampa, and Houston), but the strike could have a broader impact.
"A strike will cause significant disruptions to both the U.S. and global economies," said Brent Moritz, a supply chain management professor at Penn State University.
According to the specialized site Lloyd's List, these ports handle more than half of all imported goods by volume.
Oxford Economics estimates that each week of the strike would cut U.S. GDP by $4.5 to $7.5 billion.
This stoppage would come just five weeks before a hotly contested presidential election.
Election
Joe Biden, who calls himself the "most pro-union president," seems unlikely to invoke the Taft-Hartley Act—used repeatedly for ILA strikes before 1977—to impose an 80-day cooling-off period.
Nearly 180 trade organizations wrote to him in mid-September, urging "immediate" intervention to restart the dialogue. Nearly 70 Republican lawmakers made similar pleas.
Imports of fresh products (particularly fruits), pharmaceuticals, and aviation exports are expected to be especially affected.
"You can't tell a banana to stop ripening" just because a ship can't dock in Delaware and has to unload on the West Coast instead, notes Moritz.
The automotive industry is also expected to suffer, as it relies on just-in-time supply chains for importing parts, and the ports of Baltimore and Georgia handle significant volumes of vehicle exports.
What Alternatives?
Ship earlier, use the West Coast or Canada, or turn to more expensive air freight, which is mostly reserved for lightweight, high-value products (pharmaceuticals, electronic chips, luxury goods).
Using West Coast ports, which operate under a separate labor agreement reached in 2023, is not a perfect solution. Besides extending shipping routes via the Panama Canal or around Cape Horn, and raising costs, those ports have limited capacity, especially with the influx of goods from Asia ahead of the holiday season.
Harold Daggett, the ILA president, hinted that they might show solidarity with the striking workers by taking certain actions. However, their contract prohibits any work stoppages. According to several experts, these dockworkers could, for example, delay unloading/loading of rerouted ships, slow down operations—by taking breaks together—perform maintenance during peak hours, and so on.
Some supply chain managers have already opted to ship their transatlantic goods earlier.
According to Judah Levine, a manager at the logistics platform Freightos, the peak season started as early as May, and August nearly set a record, although the seasonal peak is usually in September/October.
This trend has been reflected in prices: the average cost of shipping a 40-foot container from Shanghai to New York is around $6,000, compared to $2,600 a year ago and $9,800 in mid-July, according to Freightos.
The effects of a strike could disrupt the supply chain well beyond the strike itself—Moritz estimates that one day of strike causes a week of disruptions—and disorganize global trade.
This comes at a time when international trade is already affected by attacks in the Red Sea.
Source: AFP, September 28, 2024.
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