Trade Groups Urge Biden to Act as East and Gulf Coast Port Strike Looms

A coalition of 177 trade associations has appealed to President Biden for immediate intervention in stalled labor negotiations between the International Longshoremen’s Association (ILA) and port employers represented by the United States Maritime Alliance (USMX).

The current labor contract, covering 45,000 dockworkers at container ports along the East and Gulf coasts, is set to expire on September 30, 2024, with the ILA threatening a coastwide strike if a new agreement isn’t reached by the deadline.

The letter, representing a broad array of industries including manufacturers, farmers, retailers, and logistics providers, calls for immediate action from the administration to avoid significant disruption in the supply chain.

“With two weeks left until the ILA-USMX contract expires and the ongoing threat of a coastwide strike beginning on October 1, it is imperative that the administration engage with the parties to quickly negotiate a new deal or agree to continue negotiations while keeping the ports open and cargo flowing,” the letter states.

The coalition warns of potentially severe economic consequences if a deal isn’t reached. “A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend.”

Despite the trade associations’ plea, a Biden administration official said that the President does not intend to invoke the Taft-Hartley Act to prevent a strike. “We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now,” the official told Reuters. Instead, the administration encourages all parties to “remain at the bargaining table and negotiate in good faith.”

The ILA remains resolute in its intention to strike if its demands for higher wages and improved benefits are not met.

“A sleeping giant is ready to roar on Tuesday, October 1, 2024, if a new Master Contract Agreement is not in place. My members have been preparing for over a year for that possibility of a strike,” said ILA President Harold J. Daggett.

The primary point of contention is wages. The ILA argues that current salaries have not kept pace with inflation and the surge in ocean carriers’ profits. The ILA reports that over the past three decades, annual wage increases for its workers averaged only 2.02 percent, with some years seeing no increases at all. The union is now seeking more substantial raises. “We are looking for a much higher percent increase in our wages,” said Daggett.

The ILA also accuses the alliance of engaging in a “propaganda campaign” and leaking details of the talks to the media.

In a statement issued Tuesday, the USMX expressed disappointed at the current impasse. ”The only way to resolve this impasse is to resume negotiations, which we are willing to do at any time,” it said.

“We understand and appreciate the concern from these trade associations, who realize what is at stake if negotiations are unable to progress, and we call on the ILA to return to bargaining so we can reach a new deal before the expiration of our current agreement, something we continue to believe is possible if the other side is willing to meet,” the statement added.

The potential strike coincides with a significant surge in U.S. container imports. Container xChange reports a 12.9% year-over-year increase in August 2024, with major ports handling nearly 2.5 million TEUs. The National Retail Federation projects this trend to continue into September and October.

As the deadline approaches, the shipping industry faces major uncertainty. Maersk has warned that even a one-week shutdown could result in 4-6 weeks of recovery time, with significant backlogs and delays compounding each day.

HSBC Global Research warns that a potential strike could affect over 50% of U.S. imports and 15% of the global fleet, cautioning that imports from Europe and Latin America might come to a standstill, while redirected Asian imports could overwhelm West Coast ports.

Christian Roeloffs, CEO of Container xChange, advises companies to “anticipate short-term spikes in demand for leased containers as retailers rush to secure goods ahead of potential disruptions”.

To mitigate risks, Roeloffs recommends that traders “diversify their partner networks, sourcing strategies, and explore alternative ports to mitigate container shortages.”

Related Video – Countdown to an East Coast Strike