Thousands of unionized dockworkers on the East and Gulf Coasts could go on strike as early as Tuesday, stranding cargo and sending ripples through supply chains for consumer goods and manufacturing parts.
A contract between the operators of port terminals and the International Longshoremen’s Association, covering workers who load and unload cargo ships at three dozen ports, is set to expire on Monday. Their facilities include massive container ports in New Jersey, Virginia, Georgia and Texas, as well as the Port of Baltimore, a major hub for the import and export of vehicles and heavy machinery.
The port operators group, the United States Maritime Alliance, and the union remain at an impasse over wage increases. Federal officials have said President Biden is not planning to invoke a nearly 80-year-old law to force dockworkers back to work if they strike. It would be the first such walkout at all these ports since 1977.
Which ports and goods would be affected?
Workers at ports from Maine to Texas would walk off the job at 12:01 a.m. Tuesday. These ports handle about half of all goods shipped to the United States in containers. One of them, the Port of New York and New Jersey, is the third busiest in the country.
Longshoremen play a crucial role in the movement of cargo. They are responsible for loading and unloading ships, and they secure vessels that arrive and depart from U.S. ports. For the most part, ocean transport to and from these ports can’t happen without them.
Cargo that could be affected by the strike includes everyday consumer goods, like bananas, many of which come through a port in Delaware. Just over half of imported apparel, footwear and accessories also come through East Coast ports. Manufacturing parts and cars move through these ports, too.
The I.L.A. has said the strike would not disrupt the flow of military cargo or the operations of cruise ships.
Why are port operators and the union at an impasse?
Roughly 45,000 longshoremen are covered by a contract between the Maritime Alliance and the I.L.A. Negotiations between the alliance and the I.L.A. have been stalled since June, when the union broke off talks citing the use of labor-saving technology at the port in Mobile, Ala.
A key sticking point is wages. East and Gulf Coast longshoremen with six or more years’ experience currently earn $39 an hour, up 11 percent from the start of their previous six-year contract. But over that the same period, inflation has risen 24 percent. A person familiar with the negotiations said the union was asking for a $5-an-hour raise in each year of the new six-year contract, while employers were offering annual raises of $2.50 an hour.
Last week, the Maritime Alliance accused the dockworkers’ union of refusing to negotiate, and asked a federal labor regulator to force the I.L.A. to come to the table. The union said the two sides had “communicated multiple times in recent weeks,” adding that the talks were deadlocked because the alliance was offering “an unacceptable wage increase.”
At West Coast ports, dockworkers belong to a different union that agreed to a new contract last year.
How would a strike affect businesses and consumers?
A strike could cost the economy $5 billion a day, or about 6 percent of gross domestic product, JPMorgan analysts said. More than 68 percent of all U.S. container exports and more than 56 percent of container imports flow through East and Gulf Coast ports, according to the National Association of Manufacturers.
Many businesses would be hurt by a walkout because lots of raw materials — wood and cotton, for example — pass through these ports. Most imports of pharmaceutical products carried in containers flow through the affected ports. And a wide variety of food shipments pass through the East and Gulf Coast ports.
But consumers are not likely to notice the strike right away. Many companies have prepared for a strike by, among other things, diverting shipments to West Coast ports. In California, the Port of Long Beach reported its best month ever in August. Companies have also imported goods earlier than usual, including for the holiday season.
Still, congestion at West Coast ports could cause delays and lead to higher freight costs, which could eventually raise retail prices. The longer the strike goes on, the more it will hurt consumers — but even a short strike could cause some problems. It would take roughly six days to clear the backlog for each day the ports are shut down, according to the JPMorgan analysts.
Could the president get involved?
Under the 1947 Taft-Hartley Act, Mr. Biden has the authority to order striking dockworkers back to work. But administration officials have said he is not planning to invoke that act and force dockworkers back to work, and the A.F.L.-C.I.O. has said he should not intervene.
“Averting a strike is the responsibility of the employers who refuse to offer I.L.A. members a contract that reflects the dignity and value of their labor,” the labor group’s president, Elizabeth Shuler, said in a letter to members of Congress.
Robyn Patterson, a White House spokeswoman, said on Friday that senior administration officials were encouraging port operators and the union “to come to the bargaining table and negotiate in good faith.” She added that the administration’s task force on supply chain disruptions was “prepared to respond swiftly to help minimize potential disruptions.”
Other presidents have invoked the Taft-Hartley Act to end dockworkers’ strikes. In 2002, President George W. Bush intervened in the 11-day shutdown of 29 West Coast ports, saying the ports were “vital to our economy and to our military.” And President Richard Nixon invoked the act in 1971 to end a wave of port walkouts.
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