Strike Shuts Eastern US and Gulf Ports, Threatening Economy

Dockworkers walked out of every major port on the US East and Gulf coasts for the first time in nearly 50 years, staging a strike that could ripple across the world’s largest economy and cause political turmoil just weeks before the presidential election.

The 36 affected ports have the combined capacity to handle as much as half of all US trade volumes, and the closures immediately halt container operations and auto shipments. Energy supplies and bulk cargo won’t be directly affected. Some exceptions will be made to allow for the movement of military goods and cruise ships.

The significance of a work stoppage at every major container port from Houston to Miami and New York-New Jersey depends on how long the strike lasts. The economic loss from the shutdown, which began at 12:01 Tuesday morning Eastern Standard Time, will be between $3.8 billion to $4.5 billion a day, according to JPMorgan Chase & Co.

Shipping congestion resulting from a week-long strike would take about a month to clear, according to Grace Zwemmer at Oxford Economics.

Shares of Denmark’s A.P. Moller-Maersk A/S and Germany’s Hapag-Lloyd AG fell on Tuesday, after both container lines gained more than 11 percent in September.

The International Longshoremen’s Association is seeking higher wages and a rollback of the language on automation in a six-year contract that expired at midnight. Union leader Harold Daggett has for months threatened a strike starting on Oct. 1 if no deal is reached before the deadline. The last time East and Gulf coast dockworkers went on strike was in 1977.

“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes,” Daggett said in a statement posted to Facebook. The last offer from the companies “fell far short of what ILA rank-and-file members are demanding in wages and protections against automation.”

The ocean carriers and terminal operators represented by the US Maritime Alliance, also known as USMX, have accused the ILA of refusing to negotiate since the union called off talks back in June. A strike was all but certain until Monday afternoon, when reports emerged that the White House has been in communication with the two sides over the weekend and some progress has been made on wages.

President Joe Biden, who prides himself on being pro-union, has said the dispute is a matter for collective bargaining and he wouldn’t invoke his authority under national security laws to order dockworkers back to the ports while negotiations continue.

Trade, transportation and retail industry groups have been urging the White House to intervene to limit damage from the strike. Container carriers are preparing to impose surcharges tied to the disruption, raising the overall cost of shipping.

$2.1 Billion a Day

“It would be unconscionable to allow a contract dispute to inflict such a shock to our economy,” Suzanne Clark, CEO of the US Chamber of Commerce, wrote in a letter to Biden on Monday.

“Taft-Hartley would provide time for both parties in negotiation to reach a deal on a new labour contract,” Clark continued, referring to the 1947 congressional act that allows a president to intervene in labour disputes that involved national security.

Estimates from the National Association of Manufacturers show the strike jeopardises $2.1 billion in trade daily, and the total economic damage could reduce GDP by as much as $5 billion a day. NAM President and CEO Jay Timmons urged Biden to force a resumption of operations while negotiations continue.

“The president can protect manufacturers and consumers by exercising his authority, and we hope he will act quickly,” Timmons said in a statement late Monday.

The Teamsters union issued a statement Monday urging the Biden administration to stay out of the dispute. ILA leader Daggett has warned the White House not to intervene, and said if forced back to the ports, dockworkers would handle fewer containers than usual, slowing operations.

The union hasn’t endorsed a presidential candidate, though according to Daggett, former President Donald Trump “promised to support the ILA in its opposition to automated terminals” during a Mar-a-Lago meeting last fall. Neither Trump nor Vice President Kamala Harris has drawn public attention to the strike threat.

“Moments ago, the first large-scale eastern dockworker strike in 47 years began at ports from Maine to Texas, including at the Port Authority of New York and New Jersey,” New York Governor Kathy Hochul said a statement just after midnight.

“In preparation for this moment, New York has been working around the clock to ensure that our grocery stores and medical facilities have the essential products they need,” she said.

Meanwhile, the flow of goods has already been redirected by the threat of disruption. Many importers brought their goods in early or through West Coast ports to mitigate the risk and pad inventories.

Port terminals along the coasts wound down their operations ahead of the midnight deadline, and railroads are also pulling back service.

“The most important thing is going to be for the carriers, shippers and workers to come to terms,” said Transportation Secretary Pete Buttigieg on Bloomberg Television’s “Balance of Power.” “There’s really no substitute for the ports being up and running.”

By Laura Curtis