Massive port strike begins across America’s East Coast, threatening shortages and rising prices

CNN

By Chris Isidore and Vanessa Yurkevich, CNN

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.

“USMX brought on this strike when they decided to hold firm to foreign owned ocean carriers earning billion-dollar profits at United States ports, but not compensate the American ILA longshore workers who perform the labor that brings them their wealth,” said ILA President Harold Daggett, in a statement released an hour after the strike started. “We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve.”

The USMX did not respond to requests for comment on the start of the strike.

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 really 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. While the union says there are about 50,000 members covered by the contract, 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, but a person familiar with negotiations said that offer had been rejected to by union. The ILA is not publicly discussing its demands, but going into the weekend it was reportedly asking for annual pay hikes that would result in raises totaling 77% through the life of the contract, with top pay climbing from $39 an hour to $69.

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 use of automation in place.

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 in order 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.

Daggett, wearing a sweatshirt emblazoned with the words “The Docks are Ours,” addressed the strikers outside of the Port of New York and New Jersey, in a video posted to an ILA Facebook page.

“I want to tell you all what you’re doing is right. This is going down in history, what we’re doing here,” he said. He recalled the union’s last strike when he and other union members were on strike for three months to earn an extra 80 cents an hour.

“Now they’re making billions and billions of dollars, through the pandemic, when all of us were working. Who’s the greedy ones here?” he said. “We’re’ going to show them…because nothing’s going to move without us.”

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.

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.”

Yet it’s not clear if simply ordering the union members back to work would actually get the cargo moving over the docks.

There are numerous ways the workers can slow the flow of freight while strictly following 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.

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CNN’s Arlette Saenz contributed to this report.