Disruptive strike actions could begin at major U.S. ports on the east and gulf coasts such as New York-New Jersey, Savannah, and Houston as soon as October 1. Initial optimism that a new labor agreement could be reached quickly by the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) has faded as no progress has been made during the summer months. With less than two weeks left to reach an agreement, it is becoming increasingly likely that the current contract will expire on September 30, exposing ports across the U.S. to work stoppages, shipping and cargo processing delays, and worsening backlogs.
Three potential strike scenarios emerge as negotiation deadline approaches
At this point in the negotiations, there are three main scenarios that could unfold. The first is that an agreement is reached to avoid any strike action before the contract deadline. On September 13, the USMX announced that it remained committed to reaching a new deal before the expiration and called for the ILA to return to the bargaining table. A last-minute agreement would avoid impacts to cargo movements and allow port operations to continue unhampered. The second scenario is the implementation of a work-to-rule order after the expiration of the current contract. Similar measures were employed during the west coast port negotiations in 2022-2023. In this scenario, port workers could limit or partially halt port operations through restricting overtime work and engaging in spontaneous walkouts. While the effects would be less damaging than a full-scale strike, longer vessel queues and wait times would likely lead to increased congestion at affected ports. Lastly, the third scenario is a full-scale strike action with major operational disruptions across U.S. east and gulf coast ports.
The ILA has repeatedly affirmed its commitment to launching full-scale strike actions in the event of non-agreement. The union met in early September to discuss plans for mobilization and reported near unanimous support from members for these strike action plans. A full-scale strike would result in immediate impacts on cargo movements by increasing congestion on east and gulf coast ports but also causing heavy diversions to U.S. west coast ports. The U.S. east coast ports of Wilmington, North Carolina, and Savannah, Georgia both employ union and nonunion port workers to operate port cranes, while union members perform all other stevedoring tasks. In the event of a strike, however, neither port expects operational continuity as nonunion workers are likely to join in on solidarity strikes.
Strike impacts likely to extend to U.S. west coast ports through diversions
In the event of a strike, U.S. west coast ports would almost certainly see an increase in congestion from the increase in diverted cargo flow. U.S. east and gulf coast ports combined account for roughly 50% of imported cargo, and west coast capacity would quickly become inundated with the increased volume. This may lead to disruptions such as longer vessel waiting times, congestion in container storage yards, and delays in rail operations in and out of affected ports. In addition, the threat of work stoppages on the U.S. west coast in solidarity cannot be ruled out. The International Longshore and Warehouse Union (ILWU) has pledged its backing to its east and gulf coast counterpart. While the ILWU has not outlined any specific actions it plans to take in support, solidarity strikes of any kind could prompt nationwide port disruptions and severe impacts on maritime trade with the U.S.
Counts for waiting vessels at North American ports have steadily increased to the highest numbers recorded for this year. This is likely due to early diversions by shippers who are interested in preemptively avoiding disruptions from the looming strikes. This includes the Retail Industry Leaders Association which has already diverted its cargo to U.S. west coast ports and has increased its fall season inventory earlier in the year than normal to avoid any potential disruptions to its supply chain. If other industries follow suit, either preemptively or following a strike declaration, congestion numbers are likely to quickly increase from the current lows recorded at west coast ports.
U.S. government unlikely to intervene to block port strikes
Under the Taft-Hartley Act, President Biden can order port workers to avoid strike action while government mediation to reach an agreement takes place. On September 17, however, the Biden administration issued a statement detailing that it has no intention to intervene to block the strike action this time and instead encourages continued negotiations between the parties involved. The timing of the U.S. presidential election could be a factor in this decision, as the Biden administration has been outspokenly pro-union and any move to undermine union strength in negotiations would likely harm Vice President and running presidential candidate Kamala Harris’ chances of securing union support before the general vote in November.
While direct government intervention is unlikely given this announcement, the current administration has a strong incentive to avoid a full-scale strike action and the severe economic impacts that could unfold as a result. As economic strength has already become a cornerstone of the presidential election, a strike of any length could leave Harris vulnerable to lost support due to supply chain disruptions and economic challenges resulting from the port workers strike. Historic precedent during the U.S. west coast port strikes shows that other mediation avenues are possible, such as sending a high-ranking politician to encourage an agreement between parties without direct mediation or involvement. This is what occurred in 2022-23 when Labor Secretary Julie Su appeared in person to put pressure on both parties to come to an agreement.
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