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There is a threat of a port strike on the US East Coast on Tuesday, and no talks are planned
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There is a threat of a port strike on the US East Coast on Tuesday, and no talks are planned

Longshoremen on the US East and Gulf Coasts will go on strike at midnight on Monday. There are currently no talks planned to prevent a shutdown that would halt container traffic from Maine to Texas and cost the economy up to $5 billion a day.

The labor contract between the International Longshoremen’s Association (ILA), which represents 45,000 longshoremen, and the employers group United States Maritime Alliance (USMX) expires late Monday, and negotiations over pay are at an impasse.

There will be a port strike starting at 12:01 a.m. ET on Tuesday, the ILA said Sunday. The USMX “refuses to confront half a century of wage suppression,” the union said in a statement Sunday.

If union members walk off the job, it would be the first coastwide ILA strike since 1977, affecting ports that handle about half of the country’s maritime shipping.

There are no negotiations and none planned before Monday’s deadline, a person familiar with the matter said on condition of anonymity because of the sensitive nature of the matter.

The union had previously said the strike would have no impact on military cargo deliveries or cruise ship traffic.

But a strike could halt the flow of everything from food to cars at major ports, potentially threatening jobs and fueling inflation weeks before the U.S. presidential election.

Business Roundtable, which represents major U.S. business leaders, said it was “deeply concerned about the possible strike at East and Gulf Coast ports.”

The group warned that a work stoppage could cost the economy billions of dollars each day and harm businesses, workers and consumers across the country. “We call on both sides to reach an agreement before the deadline on Monday evening.”

A short strike could have limited economic impact because many companies have imported additional goods or shifted more supplies to West Coast ports ahead of a possible work stoppage. But a strike that lasts weeks could have serious economic consequences.

“These people today don’t know what a strike is,” Harold Daggett, the ILA’s passionate leader, said in a recent video post. “I will cripple you. I will cripple you.”

For months, Daggett has threatened to close the 36 ports covered by his union unless employers like container ship operator Maersk and its APM Terminals North America raise significant wages and stop terminal automation projects.

The dispute is worrying companies that rely on shipping to export their goods or secure important imports.

Steve Hughes, CEO of HCS International, which specializes in the procurement and shipping of automobiles, accused the ILA of “putting pressure on the whole country.”

High stakes

An ILA strike could put pro-labor President Joe Biden in a win-win position as Vice President Kamala Harris wages a tough campaign against former President Donald Trump.

Biden said Sunday he does not plan to intervene to prevent a strike if longshoremen fail to secure a new contract.

US presidents can intervene in labor disputes that threaten national security by imposing an 80-day cooling-off period under the Taft-Hartley Act, forcing workers to return to work while negotiations continue.

On Friday, Biden administration officials met with employers’ group USMX to convey directly “that they need to be at the table and negotiate fairly and quickly in good faith” – a message it had previously conveyed to the ILA.

The USMX accused the ILA of refusing to negotiate.

Retailers, which account for about half of all container shipping volumes and are facing the crucial winter holiday sales season, have been busily implementing backup plans.

“There is potential for another big move in consumer stocks next week if, as is widely believed, East Coast longshoremen actually go on strike,” Jefferies analysts said in a note to clients.

Many major retailers rushed to purchase Halloween and Christmas items early to avoid strike-related disruptions – resulting in additional shipping and storage costs.

Retail giant Walmart, the largest U.S. container shipper, and warehouse club operator Costco say they are doing everything they can to mitigate the impact.

However, many shippers do not have this flexibility because they are small, do most of their business on the East and Gulf Coasts, or lack the financial resources to stock up on safety stock.

Ash Bhardwaj, CEO of Onx Homes, has factories in Florida and imports materials through the Port of Miami that are used to build homes in the company’s planned communities.

Like other shippers in his position, he had resigned himself to his fate. “Everyone will have the same problem,” Bhardwaj said.

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