US port shutdowns: 45,000 dockworkers walk out over pay and automation

Dockworkers from Maine to Texas started picketing early Tuesday in a strike over wages and automation . If the strike continues, it could cause inflation spikes and shortages of goods.

As per the news agency AP, the contract for about 45,000 members of the International Longshoremen's Association ( ILA ) expired at midnight. Despite some reported progress in negotiations on Monday, the workers decided to go on strike.

This marks the first walkout by the ILA since 1977 and affects 36 ports across the US.

At the Port of Philadelphia, workers began picketing shortly after midnight, chanting, “No work without a fair contract.” A truck displayed messages urging job protection, stating, “Automation Hurts Families: ILA Stands For Job Protection.” At Port Houston, around 50 workers rallied, showing signs demanding fair pay and revealing that employers had refused to adequately compensate them.

Before the strike, both the ports' representatives and the ILA adjusted their wage proposals. The ILA initially asked for a 77% pay raise over six years to keep up with inflation and make up for years of small raises. Currently, ILA members earn an average base salary of about $81,000 annually, with only a few earning over $200,000 due to overtime.

In response, the alliance offered a 50% raise over six years and pledged to maintain limits on automation from the previous contract, although the union seeks a complete ban on automation. The exact distance between both parties remains uncertain.

The alliance hopes that negotiations can start again. Their offer includes tripling employer contributions to retirement plans and improving healthcare options.

On Monday, the Port of Virginia prepared for the strike and announced on its website that work stoppages had begun. It stated that the expiration of the master agreement between the United States Maritime Alliance and the ILA resulted in a work stoppage at the Port of Virginia and other East and Gulf Coast ports.

Supply chain experts warn that consumers might not feel immediate disruptions as retailers had preemptively stocked goods ahead of the holiday season. However, if the strike lasts more than a few weeks, it could significantly disrupt the supply chain, leading to higher prices and delayed deliveries.

A prolonged strike would force businesses to absorb increased shipping costs due to delays, impacting timely delivery of various goods, from toys to perishable imports like bananas. The affected ports handle 75 per cent of the nation's banana supply, totalling 3.8 million metric tons annually, according to the American Farm Bureau Federation.

Exports from East Coast ports could also be impacted, causing traffic bottlenecks at West Coast ports. While railroads can increase freight capacity from the West Coast, they cannot fully compensate for cargo usually handled on the East Coast.

JP Morgan estimates that a shutdown of East and Gulf Coast ports could cost the economy between $3.8 billion and $4.5 billion per day, with some losses likely to recover over time after normal operations resume.

As the strike unfolds just weeks before the presidential election , it could influence the political landscape if shortages occur. Retailers and producers had hoped for a resolution or for President Biden to intervene using the Taft-Hartley Act to impose an 80-day cooling-off period.

However, Biden declined to intervene during a recent press briefing, although a White House official confirmed that the administration is in regular contact with both the ILA and the alliance to facilitate negotiations.