Port strike begins across America’s East Coast

New York (CNN) — Nearly 50,000 members of the International Longshoremen’s Association (ILA) are on strike Tuesday against the nation’s East and Gulf Coast ports, choking off the flow of many of America’s imports and exports in what could become the country’s most disruptive work stoppage in decades.

The strike, which began at midnight, will stop the flow of a wide variety of goods over the docks of almost all cargo ports from Maine to Texas. This includes bananas, European beer, wine, and liquor, along with furniture, clothing, household goods, and European autos, as well as parts needed to keep US factories operating and American workers in those plants on the job, among many other goods. It could also stop US exports now flowing through those ports, hurting sales for American companies.

A wide gap remained between the union’s demands and the contract offer from the United States Maritime Alliance, which uses the acronym USMX. The maritime alliance represents the major shipping lines, all of which are foreign-owned; as well as terminal operators and port authorities.

“If we have to be out here a month or two months, this world will collapse,” said ILA President Harold Daggett in an interview with CNN Tuesday morning. “Go blame them. Don’t blame me, blame them.”

The USMX said Tuesday afternoon in its first public comments since the strike that it was proud of its offer to the union.

“USMX is proud of the wages and benefits we offer to our 25,000 ILA employees, and strongly supports a collective bargaining process that allows us to fully bargain wages, benefits, and technology, and ensures the safety of our workers, day-in and day-out,” the group said in a statement. “We have demonstrated a commitment to doing our part to end the completely avoidable ILA strike. Our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running.”

The group said it wants the union, which has not met USMX at the bargaining table in months, to clear a path for a return to face-to-face negotiations.

Possible shortages

Depending on the length of the strike, it could result in shortages of consumer and industrial goods, which could then lead to price hikes. It could also mark a setback to the economy, which has shown signs of recovery from pandemic-induced supply chain disruptions that resulted in a spike in inflation.

The ports involved include the Port of New York and New Jersey, the nation’s third-largest port by volume of cargo handled. It also includes ports with other specialties.

Port Wilmington in Delaware describes itself as the nation’s leading banana port, bringing in a large share of America’s favorite fruit. According to the American Farm Bureau, 1.2 million metric tons of bananas come in through the struck ports, representing about one-quarter of the nation’s bananas.

Other perishable items, such as cherries, also move through the ports, as do a large percentage of imported wine, beer, and hard liquor. Raw materials used by US food producers, such as cocoa and sugar, make up a large portion of the affected imports as well.

And many non-perishable goods, such as furniture and appliances, are imported through the affected ports, too. Retailers have been rushing in recent months to get the imported products they expect to sell during the holiday season delivered to them before the October 1 strike deadline.

Many of the goods cannot be rerouted because it doesn’t make economic – or logistical – sense to ship them by plane or to other ports of entry.

The good news: Your holiday shopping might not be affected as much as you might fear. Typically 70% of goods that retailers stock up for the holidays is already shipped through the ports by this time of year. And because the strike had been telegraphed for months, that percentage is much greater this year.

But most of those holiday goods can sit in warehouses, or even in shipping containers, for months at a time. That’s not the case with perishable goods that flow through the ports, such as fruits and vegetables, which could be harder to find or cost more at the grocery store as soon as next week.

Other items, such as alcohol, furniture, and certain cars, may have enough supply that consumers won’t notice shortages for a month or so. The US Department of Agriculture said consumers shouldn’t expect significant changes to food availability or prices in the near term.

The US Department of Transportation said in a statement Tuesday that it has been engaging with shippers, ocean carriers, ports, railroads, and other supply chain partners for months to prepare for a potential strike and attempt to mitigate bottlenecks in the supply chain.

Two sides far apart

This is the first strike at these ports since 1977. The union says there are about 50,000 members covered by the contract, but the USMX puts the number of port jobs closer to 25,000, with not enough jobs for all the workers in the union to work every day.

The USMX has complained the union is not negotiating in good faith, saying the two sides haven’t met in person since June. The USMX said Monday it had increased its offer to wage increases of more than 50% over the proposed six-year contract. Daggett on Wednesday told CNN the union is seeking a $5-an-hour pay increase each year over six years, with top pay climbing from $39 an hour to $69. That would equate to a 77% pay hike over the life of the contract.

There are also disputes between the union and management about the use of automation in the ports, which the union said would cost some members their jobs. The USMX said it is offering to keep the same contract language on the use of automation in place.

“They have language in there now that’s not strong enough,” Daggett told CNN. “Because what happens is they come in with new technology … and that means the trucks are coming in and they’re already checked in somewhere else and not using the checkers in the ILA.”

Absent stronger language preventing certain automation at the ports, Daggett said he won’t return to the negotiating table.

“It’s not fair,” Daggett said. “And if we don’t put our foot down now, they would like to run over us, and we’re not going to allow that.”

The union says it has continued to talk with the USMX, just not in face-to-face negotiations. Ahead of the strike, it said management knows what it is demanding to get a deal done and that any strike would be management’s fault, not the union’s. It said its demands are reasonable given the level of profits in the shipping industry.

Shipping rates soared during and immediately after the pandemic, as supply chains snarled and demand surged. Industry profits topped $400 billion from 2020 to 2023, which is believed to be more than the industry had previously made in total since containerization started in 1957, according to analyst John McCown.

“Since Covid, they’re making billions and billions of dollars,” Daggett said. “But they don’t want to share it. They’d rather see a fully automated terminal right here on the East Coast so they can make more money.”

Businesses becoming nervous

Stuck on the sidelines and watching with great concern are businesses that depend on the movement of goods.

More than 200 business groups sent a letter to the White House last week asking the Biden administration to step in to prevent a strike, saying the country relies on moving both imports and exports through these ports.

“The last thing the supply chain, companies, and employees… need is a strike or other disruptions because of an ongoing labor negotiation,” read the letter.

The US Chamber of Commerce sent a follow-up letter Monday urging President Joe Biden to exercise powers under what is known as the Taft-Hartley Act, which became law in 1947, to keep the ports open and longshore workers on the job. President George W. Bush applied the act in 2002 to halt an 11-day lockout of union members at West Coast ports.

But Biden told reporters Sunday he has no intention of using the powers he has under Taft-Hartley.

“No,” Biden said. “Because it’s collective bargaining, and I don’t believe in Taft-Hartley.”

The White House in a statement Tuesday said President Biden and Vice President Kamala Harris are closely monitoring the strike, but they believe collective bargaining – not a stroke of a pen – is the best way to resolve the strike.

“The President has directed his team to convey his message directly to both sides that they need to be at the table and negotiating in good faith—fairly and quickly,” a White House spokesperson said in a statement. “Senior White House and Administration officials continue to work around the clock to get both sides to continue negotiating towards a resolution.”

However, the White House also noted that the president is “assessing ways to address potential impacts” of the port strike, “if necessary.”

Daggett praised the Biden administration’s efforts, in particular Acting Secretary of Labor Julie Su, whom he called “terrific.” “She’s knocking down doors. She’s trying to stop this. She’s trying to get us … fair negotiations,” Daggett said. “It’s the companies that don’t want to sit here and be fair. So that’s why we’re out here fighting for our livelihood.”

Even if the Biden administration did end the strike, it’s not clear if simply ordering the union members back to work would get the cargo moving over the docks.

There are numerous ways the workers can slow the flow of freight while strictly following the rules in the current contract. In a video posted in early September, the ILA’s Daggett said if members were forced back to work, they would likely only move a small fraction of their normal cargo volumes.

“Do you think when (members) go back to work, that those men are going to go to work on that pier?” he said on the video message. “It’s going to cost the companies money to pay their salaries, while it goes from 30 moves an hour to maybe eight.”

The shipping lines realize the problem with having Biden order the union back to work, said Peter Tirschwell, vice president of global intelligence and analytics at S&P Global Market Intelligence and chairman of the TPM shipping conference.

“A senior ocean carrier guy told me yesterday, ‘If they are forced back to work, they can make life miserable for everybody,’” he told CNN last week.

This story has been updated with additional reporting and context.