Port strike freezes shipping on East Coast, dealing blow to economy

Tens of thousands of dockworkers launched a strike at ports along the East Coast and the Gulf of Mexico on Tuesday, stranding stacks of shipping containers on docks and idling ships outside harbors in a threat to the economy just five weeks before the election.

The strike caused immediate disruptions at ports that handle more than half of the United States’ trade in cargo containers. The effects are expected to ripple through the country, costing at least hundreds of millions of dollars a day and getting worse each day the longshoremen remain off the job.

It was unclear early Tuesday what the next steps might be in resolving the dispute between the International Longshoremen’s Association and shippers and port operators.

The U.S. Maritime Alliance, which represents the companies, said Monday just hours before a midnight deadline that negotiators traded proposals in recent days and that it was offering 50% raises. The alliance said it was seeking a contract extension to allow talks to continue.

Harold Daggett, the union’s president, has said the greed of international shipping lines would be to blame for his members going on strike. The union contends its members deserve a greater share of the hundreds of billions in profits operators have made in recent years, especially after they worked through the coronavirus pandemic.

Daggett addressed workers outside the Maher Terminal in New Jersey on Tuesday morning, according to a video clip shared by the union on Facebook. The union represents 47,000 longshoremen who are responsible for loading and unloading ships, as well as maintaining equipment.

“Nothing’s going to move without us,” Daggett said, pledging that the union would be victorious. “They can’t survive too long.”

A small group of longshoremen teeming with energy tapped their signs together in a parking lot by the Port of Baltimore’s Seagirt Marine Terminal near midnight. The smell of cigarette smoke signaled their presence from several feet away.

They raised signs above their heads that read, “No Work Without a Fair Contract,” “Profit Over People is Unacceptable” and “Machines Don’t Feed Families.” Their strike solicited honks of solidarity from bus drivers, taxi drivers and a vehicle hauling several cars out of the port.

About 150 others waited for them at Dundalk Marine Terminal. The dockworkers, many in orange and yellow safety vests and pants, picketed and chanted underneath the traffic lights at the terminal entrance.

“Who are we? ILA. What we going to do? Shut ’em down,” the picketers chanted.

The White House said in a statement Tuesday that administration officials had met with both sides and had been “working around-the-clock” to avert a strike.

On Monday, the U.S. Chamber of Commerce called on President Joe Biden to seek to block the walkout by invoking the Taft-Hartley Act, which would impose an 80-day “cooling off” period for negotiations. But officials have consistently said the president does not plan to use his legal powers to try to force the parties to talk and end a strike, strengthening the union’s position.

The strike is the first such action by the ILA since 1977, when longshoremen stopped work for more than six weeks and trade was a smaller share of the overall economy. It comes at a moment of heightened militancy at unions across a range of industries, with autoworkers, Hollywood actors and Boeing machinists all launching major strikes in the past year. But unlike some of those other disputes, the longshoremen’s strike is likely to be directly felt by a broad swath of the public as imports of everything from cars to food are disrupted. Analysts expect the cost to the economy to quickly climb into the billions.

With ILA officials threatening to strike for months, many big companies have had time to prepare, ordering goods for the holiday shopping season earlier than usual and diverting shipments to the West Coast. White House officials say they are confident supply chains can weather the strike, at least for a while. That view is shared by independent analysts.

“It really is just a question of duration,” said Bruce Chan, a transportation analyst at investment firm Stifel. “If we see a strike that lasts for a less than a week, we think it’s relatively digestible for the system.”

Ports began closing their gates Monday evening as the strike loomed, after adding extra hours in recent days to give truckers as much time as possible to whisk away containers. The container terminal in Baltimore, which is still recovering from a bridge collapse in March, handled 3,100 trucks Friday and stayed open an hour late on Monday.

New York officials said Monday that approximately 100,000 shipping containers will be stranded on the docks at the Port of New York and New Jersey for the duration of the strike. Some three dozen cargo ships are expected at the port in the next week and will have to remain at anchorages, officials said. The port is the largest of about three dozen that are affected by the strike.

The union says its members will continue to handle military cargo and cruise ships. West Coast longshoremen are represented by a separate union, and ports in California, Oregon and Washington state remain open. Oil and gas terminals are operated by separate work crews that are not heavily unionized and will not be affected. High-value shipments such as pharmaceuticals are often transported by air, an option more importers could resort to.

But with major ports closed, including New York, Baltimore, Houston, Norfolk, Virginia, and Savannah, Georgia, the disruptions will be inescapable. Shortages and higher prices may land on smaller retailers that have had less chances than large chains to develop workarounds.

Estimates of the economic impact have varied, but an analysis by the Conference Board, a think tank, updated an approach used by congressional budget forecasters and concluded that a weeklong strike would lead to $3.78 billion in economic losses.

“The longer it goes the more expensive it becomes, and that’s when it’s very noticeable to the consumer,” said Erin McLaughlin, a senior economist at the Conference Board. But, at least initially, McLaughlin said, “it’s not like we’re not going to have paper towels and toilet paper at the grocery store.”

There are particular sectors that could be vulnerable. Perishable items like food could go bad – the ports handle 75% of all banana imports, for example. A lengthier strike could affect the auto industry, which relies on well-timed deliveries of parts for manufacturing. Four of the nation’s five biggest ports for receiving imported cars are among those shut down.

Fearful of the effects of a strike, business groups and congressional Republicans have been urging Biden to intervene directly and use emergency powers to send longshoremen back to work. Those calls are certain to intensify now that the strike has begun.

The White House says Biden has no desire to end the strike using Taft-Hartley authority, which allows the president to seek a court injunction to suspend a strike.

“It’s collective bargaining. I don’t believe in Taft-Hartley,” Biden told reporters Sunday.

The longshoremen’s current contract, agreed to in 2018, provides top wages of $39 an hour. The union is seeking significant pay raises after rates in the previous deal failed to keep up with inflation. Protections against the automation of port work have also been a major sticking point. The union broke off talks in June after alleging that a port in Alabama was using an automated gate in violation of the labor contract.

With the sides dug in, analysts broadly expect that the White House will ultimately have to step in as the economic costs of the strike grow.

With its potential for shortages and price increases, the strike poses dangers for the presidential election bid of Vice President Kamala Harris.

Harris and former president Donald Trump, the Republican nominee, have not weighed in on the strike.

But even if Biden made use of emergency powers, the sides would still have to resolve their underlying disputes – and workers could find disruptive ways short of striking to continue protesting.

“The parties are very far apart,” Chan said. “We think it’s going to be a fairly acrimonious negotiation.”