The International Longshoremen’s Association (ILA) initiated a major strike on Tuesday, shutting down all ports along the US East and Gulf Coasts, stretching from Maine to Texas, as of midnight. This marks the first coast-wide strike by the ILA in nearly fifty years and involves around 45,000 port workers at 36 ports. These ports handle about half of the country’s containerized imports and exports, making the strike especially impactful during the peak ocean shipping season.
The strike began at 12:01 am when ILA members set up picket lines at ports along both the Atlantic and Gulf Coasts. The main issues driving the strike include demands for wage increases and protections against automation, with the ILA and the United States Maritime Alliance (USMX) failing to reach a deal, despite last-minute negotiations. The USMX’s final offer reportedly included a wage increase of nearly 50 %, increased contributions to retirement plans, enhanced healthcare options, and maintaining current provisions regarding automation. However, the ILA rejected the proposal.
ILA President Harold Daggett argued that the strike became inevitable when USMX refused to address the union’s concerns adequately. He accused USMX of prioritizing the profits of foreign-owned ocean carriers over fairly compensating American longshore workers, who perform the labor that generates wealth for these carriers. Initially, the union had been pushing for a 77 % wage increase, but reports indicate that the ILA has lowered its wage demands to a 61,5 % increase, which is still significantly higher than the offered 50 %.
Source: Shannon Stapleton
Daggett emphasized the union’s readiness to continue the strike for as long as necessary, stating that the ILA would not return to work until their demands for better wages and protection against automation are met. He declared that “USMX owns this strike now” and that it is up to them to agree to the union’s terms for the strike to end.
The strike is expected to cause significant disruptions to US imports and exports, particularly affecting roll-on/roll-off operations and other cargo processes. As the strike progresses, its economic consequences are expected to worsen, potentially causing widespread supply chain disruptions and affecting businesses and consumers nationwide.
There have been calls for the Biden administration to intervene by invoking the Taft-Hartley Act, a law that allows the president to take action in labor disputes that threaten national economic stability. In response to the strike, Chairman of the Transportation and Infrastructure Committee, Sam Graves (R-MO), and Chairman of the Coast Guard and Maritime Transportation Subcommittee, Daniel Webster (R-FL), urged President Biden to use his authority under the Taft-Hartley Act to restore port operations and restart negotiations. They warned that every day of delay would cost the economy billions of dollars and eventually affect consumers, particularly with the holiday season approaching.
National Retail Federation (NRF) President and CEO Matthew Shay also called on President Biden to take swift action, highlighting the significant impact the strike could have on American workers and families, particularly as the country continues its economic recovery. Shay pointed out that a disruption of this scale could lead to inflationary pressures and even further complicate the recovery from natural disasters such as Hurricane Helene.
However, despite these concerns, President Biden has indicated that he does not plan to invoke the Taft-Hartley Act at this time. In a statement, he called on USMX to engage in fair negotiations with the ILA and emphasized the importance of collective bargaining. Biden highlighted that longshore workers had played a crucial role during the pandemic, ensuring that ports remained open, and he stated that these workers deserve meaningful wage increases in light of the record profits made by ocean carriers since the pandemic.
Daggett has dismissed the idea of invoking Taft-Hartley as ineffective. He warned that if the act were invoked, workers would simply slow down operations rather than stop striking, prolonging the disruption. He urged USMX to negotiate a contract that would allow everyone to move forward and avoid a prolonged economic crisis.
In the lead-up to the strike, the Federal Maritime Commission (FMC) issued a reminder to businesses and regulated entities about their responsibilities during the port shutdown. This included a focus on complying with detention and demurrage regulations, which ensure fair billing practices for shipping delays. The FMC’s Bureau of Enforcement has stated that it will investigate any reports of unlawful conduct during the strike and will prosecute violators accordingly.
This strike comes at a particularly challenging time for US imports, which have been surging throughout 2024, driven by strong economic growth. In the first half of 2024, import volumes reached 12,1 million twenty-foot equivalent units (TEUs), marking a 14,8 % increase over the same period in 2023. According to the NRF’s Global Port Tracker, US ports are expected to handle 2,31 million TEUs in September, a 14 % increase from the previous year. October forecasts predict 2,08 million TEUs, up 1,3 %. If these predictions hold, 2024 will see a seven-month streak of import volumes exceeding 2 million TEUs per month, the longest period since the pandemic-fueled surge that lasted 19 months through September 2022.
Given the high volume of incoming cargo, the strike is likely to cause immediate disruptions. Over 100 vessels are expected to arrive at East and Gulf Coast ports this week, according to supply chain analytics firm Project44. However, Flexport, a global logistics company, noted that significant diversions of cargo to West Coast ports are not expected in the short term, as such moves are not economically viable. Instead, vessels will likely remain anchored offshore, waiting for the East Coast ports to reopen. Some shipping companies have begun to omit certain port calls or drop cargo in transit at other ports, such as those in Central America, until East Coast ports resume operations.
As negotiations between the ILA and USMX remain stalled, the economic impact of the strike is expected to escalate, with businesses and consumers feeling the effects in the coming days and weeks. The potential for widespread supply chain disruptions, combined with the continued growth in U.S. imports, underscores the high stakes of this labor dispute.
