ILA Chief Daggett Aims to Make History With Election Day Looming

By Laura Curtis, Deena Shanker and Michael Sasso (Bloomberg) —

Union chief Harold Daggett, clad in a blue sweatshirt that read “The Docks Are Ours,” relished the fear he says gripped his negotiating rivals when they saw his opposition to automation — a key sticking point in the first strike on the US East and Gulf ports since 1977.

“You guys don’t realize it but you’re making history,” Daggett said through a bullhorn early Tuesday to members of the International Longshoremen’s Association who had just joined the picket line outside the Port of New York and New Jersey. “I got strong language that’s going to go in the new contract — they’re scared.”

It’s too early to enshrine Daggett’s ILA in the annals of union lore. But there’s little doubt that paralysis at the nation’s ports heading into the holidays and a contested presidential election provides him solid leverage against the United States Maritime Alliance, the group of shipping lines and port operators.

Major Port Shutdown: ILA Dockworkers Hit the Picket Lines, Halting Operations on Atlantic and Gulf Coasts

As day one of the strike unfolded, economists were trying to quantify the damage from the supply-chain disruption caused by the closure of every major maritime trade gateway from Boston to Houston. The estimates range from $1 billion to $5 billion a day in delayed or lost activity.

“The strike will disrupt production and lead to loss of income for affected workers, with spillovers down the supply chain,” according to Bloomberg Economics’ Anna Wong and Nicole Gorton-Caratelli. “We estimate a hit to GDP of as much as $3 billion per day from forgone spending and production. A week-long strike could knock 0.3 percentage point off annualized GDP.”

In Washington, Democrats and Republicans alike are struggling to navigate the political impact just five weeks before a close presidential election. On one hand, supporting a union that’s shutting down parts of the economy in a fight for higher wages and job security could alienate voters worried about supply chain disruptions and shortages. On the other, intervening to ease the economic pressure risks losing crucial blue-collar support in the process.

President Biden Urges Foreign-Owned Port Employers to Improve Offer and End Dockworker Strike

So far, President Joe Biden has made no move to invoke his authority to send the union back to work and resume negotiations, despite growing pressure from business groups urging him to act quickly.

“Just one day of paused operations will have devastating consequences on the economy, and hardworking American families will feel the impact of higher prices, empty shelves, and lost economic output,” US House Speaker Mike Johnson said on Tuesday. 

For the economy, it’s more of a slow-rolling tremor than a sudden shock. Ships unable to offload cargo, pickup exports or find alternative routes will instead drop anchor and wait it out. Those delays will reduce shipping capacity ahead of the holiday shopping season, forcing spot freight rates higher.

Holiday Wine

John Wrenn, chief operating officer of  MHW Ltd., a Manhasset, New York-based beer, wine and spirits distributor, said he’s worried about getting products delivered across the ocean in time for the holiday season – and in a way that still allows for a profit.

U.S. Port Strike Adds Uncertainty to Fed’s Inflation Fight

A 40-foot container costs about $4,000 to $5,000 to ship to the US from Europe, but now there are peak-season and strike-related surcharges adding another $1,500 to $2,000. In just a few weeks, the rate has gone up 30% to 40%.

Bringing merchandise into the US through the West Coast doesn’t look viable yet, and air cargo rates are prohibitively expensive, he said. “It won’t take long for this snowball and really hurt the holiday season,” Wrenn said.

Peanut butter and jelly maker J.M. Smucker Co., based in Ohio, said it relies on imports of finished goods and raw materials from both the East and Gulf coasts. The company has said it plans in place to keep business moving, including making adjustments to its manufacturing plans and evaluating West Coast routes. Still, in the event of an extended strike, the company will need to evaluate supply chain impacts.

A Walmart Inc. spokesman said the company prepares for supply chain disruptions and maintains additional sources of supply.

Costco Wholesale Corp. executives said last week that the strike is expected to affect a chunk of non-food items that it imports. Non-food items make up about 25% of Costco’s total business. The company has shipped holiday goods and some products earlier to get ahead of the strike.

While Pringles maker Kellanova says it has not experienced significant impacts to its supply chain, it is developing “contingency plans” to make sure it can still get its products to consumers.

Conagra Brands, Inc., which makes brands like Slim Jim and Duncan Hines, says they’ve been working with suppliers in preparation for the strike “for months,” and expect to be able to get through the strike without significant impact.

Carmaker Contingencies

With the strike only just starting, automakers and other manufacturers in the US that rely on a regular flow of foreign-made parts and export sales have activated their plan Bs hoping to avoid widespread problems.

Toyota Motor Corp. said it’s monitoring the situation closely and mulling contingency plans to minimize any impact on car buyers and dealers, a spokesman for its US operations said Monday. The carmaker has prepared for a possible strike by building up extra inventory, but the spokesman didn’t specify how much.

A General Motors Co. spokesman said the company has made contingency plans and has also been building inventory of parts. Ford Motor Co. is monitoring the situation closely, according to a spokesman, who said it is too early to speculate on potential impacts.

South Korean automaker Hyundai Motor Co. has a factory in Alabama and relies on ports in Philadelphia and Georgia. “Our logistics affiliate Hyundai Glovis is closely monitoring the labor situation and works on contingencies daily to ensure the steady processing and delivery of Hyundai vehicles,” a company spokesperson said by email.

Airbus SE, the France-based rival of Boeing Co., is aware of the situation and has taken actions to mitigate the potential impact on its operations in Mobile, Alabama, a spokesperson said in an email.

Granite Imports

Smaller businesses are in the crossfire, too.

A stone’s throw from the Wando Welch container terminal, the largest at South Carolina’s Port of Charleston, Scott Hunter fears a strike might delay shipments of the granite slabs he needs for his elaborate outdoor kitchen and grill arrangements, which come from the Mediterranean region and South America.

For now, the owner of Palmetto Outdoor Kitchens of Mount Pleasant, South Carolina thinks there’s enough granite in coastal South Carolina to make do, but a prolonged strike might stress that.

Another fear is that the strike may lead to huge backups of ships and trucks, which already back up along Long Point Road leading to the terminal. “I don’t know what they’re going to do,” Hunter said.

Global Ambitions

During his pep talk on Tuesday, as he rallied a small number of the 45,000 longshore workers fighting for higher pay and against automation, Daggett mentioned plans to take his campaign against port automation global.

He wants to organize dockworkers all over the world to disrupt operations at port terminals owned by companies that are planning to add automated technology, regardless of where.

“And when we finally do get a contract I’m going to go to Portugal with every union in the maritime to take these companies on over automation,” he said. And if automation arrives at ports in Chile, “we’ll shut them down for three weeks around the world.”

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