On October 1 at 12:01 local time, approximately 45,000 dockworkers launched a strike at U.S. east and gulf coast ports. The workers are represented by the International Longshoremen’s Association (ILA) while the 36 major ports impacted by the strike are represented by the United States Maritime Alliance (USMX). Ports from Maine to Texas are impacted by the coordinated strike action, including New York-New Jersey, Savannah, Charleston, Houston, and Mobile, among others. While negotiations on a new collective bargaining agreement began earlier this year, talks between the ILA and the USMX soured this summer over differing views on future uses of automation in port operations and worker wage increases.
The ILA has demanded that the new contract agreement explicitly protects the future of dockworker’s jobs through continued restrictions on the use of automation. This issue has been contested throughout the negotiation process, with a key point of argument from the ILA being the automatic gates installed at a terminal in the Port of Mobile. The union has also demanded that the new deal include a pay increase for workers of roughly 75-77% over the life of the new six-year contract. Initial offers from the USMX were well below this increase, which stalled negotiations throughout the summer months and led to an impasse in discussions. The USMX made one final offer on September 30 which reportedly included a 50% pay increase for workers, but the union promptly rejected it and commenced the strike action.
Different strike scenarios remain possible moving forward
Throughout the negotiation process, it was uncertain which strike measure the union would take if a new contract agreement could not be reached. On October 1, the decision to launch a full-scale strike at the union-represented ports marks a departure from the disruptions at U.S. west coast ports in 2022-2023. Although the contract expired for west coast ports in a similar way, the International Longshore and Warehouse Union (ILWU) never launched full-scale strike action and instead used a series of informal pickets, spontaneous union meetings, and overtime limitations. While operational disruptions and cargo processing delays occurred, U.S. west coast ports remained open throughout the negotiations which minimized the supply chain impacts.
Contrastingly, full-scale strikes are set to take place on both the east and gulf coasts until a new contract agreement is reached. There is a possibility that pressure from the White House or business groups could force the port workers to consider a work-to-rule order with only partial disruptions, but this option has not yet been publicly discussed. Carriers are likely to continue their “wait and see” approach at anchorage outside affected ports unless the strike persists longer than one week. In that case, it is possible that growing cargo delivery delays may prompt non-time-sensitive shipments toward lengthy diversions for processing and onward transit from other ports. Time-sensitive goods may be temporarily shipped by air given limited buffer stocks. If the strike lasts beyond two weeks, diversions of general goods to other ports and ocean to air freight conversions of sensitive goods are both likely to occur on a large scale, and for the foreseeable future, to ensure domestic supplies for U.S. consumers and healthcare patients.
U.S. government unlikely to intervene in strike negotiations despite pressure
Many business groups have called for President Biden to intervene in the negotiations and force the two parties to come to an agreement through mediation efforts. Under the Taft-Harley Act, the U.S. president has the authority to order port workers to return to their jobs if the strike presents a threat to national security. In response to this pressure, President Biden has explicitly stated that he does not intend to invoke Taft-Hartley or see intervention as a viable step forward. He has instead called for the two sides to continue in collective bargaining but remains pro-union in his stance that USMX should increase the wage offer for workers given the high profitability of ports in the last several years.
Given the election season, it remains unlikely that the government will intervene, and risk being seen as anti-union. However, the administration also risks a loss in confidence from voters if the strike continues and damages the U.S. economy, the latter being a consistent a key voting issue in most U.S. elections. Given the government’s strong economic incentive to see the talks come to a speedy resolution, the White House is most likely to follow the approach that it used during the 2022-2023 U.S. west coast negotiations. In 2023, President Biden sent Department of Labor Secretary Julie Su to the negotiating table to help finalize a deal with an objective, amicable approach. Should this tactic be employed again, prospects of an early cessation of strike activity, or at the very least a reduction in the full-scale nature of the strike, could occur.
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