Striking dock workers have closed ports on the US East Coast

WASHINGTON—

The union representing thousands of dock workers from Maine to Texas launched a strike Tuesday over wages and the use of automation, closing seaports in a work stoppage that threatens to cause significant disruption to trade and the national economy.

It was the first strike since 1977 for the International Longshoremen’s Assn., whose 47,000 members handle cargo operations at three dozen East and Gulf Coast ports that receive about half of U.S. imports. And it comes at a vulnerable time, both economically and politically, as the country emerges from a period of high inflation and is just a month away from national elections.

If the strike ends quickly, it is not expected to have major consequences for businesses or consumers. Many retailers had their products shipped earlier than normal and built up inventory in anticipation of a labor action. Some importers have moved goods by air and others have diverted freight to the West Coast, contributing to increased traffic at the ports of Los Angeles and Long Beach, the busiest container complex in the US.

But with each passing day, economists say this will cost billions of dollars in lost trade, although some of that would be recouped later. And if the ports remain closed for more than a week or two, bigger and broader consequences will hit the U.S. economy.

Initially, the impact may be relatively small and even unnoticeable to most consumers, with products like European wine and perishables like bananas costing more, said Jason Miller, a supply chain management expert at Michigan State University. But after a few weeks, he said, automakers that produce cars in the U.S. could be forced to slow production or even impose temporary layoffs if they can’t get enough imported parts and components.

“There is simply a limit to what the system can handle. You can only deduce so much,” Miller said.

Idle cranes and shipping containers are seen in Port Jersey during a port strike on October 1, 2024 in Bayonne.

The Biden administration has said it is not considering invoking the 1947 Taft-Hartley Act to break a strike, but analysts say it has little choice if the strike is not resolved quickly given the potential economic and political damage it could cause.

The ports of Los Angeles and Long Beach combined had their busiest August on record this year, and both ports have been preparing for increased cargo volumes in anticipation of the strike. West Coast dockworkers are represented by another union, which signed a new contract last year.

“Port operators on the West Coast have learned to operate under intense pressure as trade reopens after pandemic-era disruptions,” said Joseph Brusuelas, chief economist at tax and advisory firm RSM US. “We believe this will partially mitigate some of the impacts that will negatively impact trading volumes for the duration of the labor action.”

Brusuelas estimated that the strike would affect about $1.3 billion in exports and $3 billion in imports daily, still a modest amount considering the size of the U.S. economy. “The main industries affected by this action will be local transportation, warehousing and import of cars,” he said. “Agricultural products, coal and oil will have the greatest impact in the short term.”

Impact rates are heaviest where the largest ports are located on or support the Atlantic and Gulf Coasts, including New York-New Jersey; Savannah, GA; Houston; and Charleston, S.C. But California companies say they expect this to affect them and consumers on the West Coast as well.

Third-generation longshoreman Ray Bailey Jr., manager of ILA Local 1291, encourages picketers in Philadelphia.

“If we’ve learned anything from past supply chain disruptions, it’s that their consequences result in higher costs for consumers for goods like clothing, fruits and vegetables, and medical supplies,” said Patty Tschaepe, president of Los Angeles Customs Brokers and Freight Forwarders Assn.

Dock workers began picketing after their six-year labor contract with the United States Maritime Alliance expired at midnight.

The alliance, which represents shipping lines and terminal operators at the ports, said late on Monday that the two sides had exchanged offers in what appeared to be a last-ditch effort to avoid a strike. According to published reports, the union is pushing for wage increases of 77% over six years. The maritime alliance said on Monday it had offered almost 50%.

Top-level dock workers earn a base salary of $39 per hour. The union has also cracked down on employers who want to use robotics and other labor-saving technologies. The alliance said Monday it had offered to maintain the current language on automation and semi-automation.

The union said in its latest statement Monday that the largely foreign-owned ocean carriers had made billions of dollars in profits off the backs of union workers whose wages have been eaten away by inflation.

Neither party had immediate comment Tuesday.