US East Coast porters strike, halting half of nation’s shipping

Dock workers on the US East Coast and Gulf Coast began a strike early Tuesday, their first large-scale shutdown in nearly 50 years, halting the flow of about half of the nation’s shipping, after negotiations over a new shipping contract work failed because of wages.

The strike is blocking everything from food to auto shipments at dozens of ports from Maine to Texas, in a disruption analysts warn will cost the economy billions of dollars a day, threaten jobs and could fuel inflation.

The International Longshoremen’s Association (ILA), which represents 45,000 dock workers, had been negotiating with employers’ group the United States Maritime Alliance (USMX) for a new six-year contract ahead of a September 30 midnight deadline.

The ILA said in a statement Tuesday that it closed all ports from Maine to Texas at 12:01 a.m. ET (0401 GMT) and rejected USMX’s final proposal made Monday, adding that the offer was “well below the demands of its members. to ratify a new contract.”

ILA leader Harold Daggett said employers such as container operator Maersk and APM Terminals North America had not offered adequate wage increases or accepted demands to halt port automation projects.

Viewpoint: The East Coast Port Strike: Insurance and Risk Management Implications

USMX said in a statement Monday that it has offered to raise wages by nearly 50 percent, up from a previous proposal. Meanwhile, Daggett said the union is pushing for a 61.5 percent pay increase, according to CNBC.

“We are prepared to fight as long as necessary, to remain on strike for however long it takes, to get the wages and protection against automation that our ILA members deserve,” Daggett said Tuesday.

“USMX owns this strike now. Now they must meet our demands so that this strike ends.”

USMX did not immediately respond to requests for comment.

The strike, the first by the ILA since 1977, worries businesses that rely on shipping to export goods or secure crucial imports as it affects 36 ports that handle a wide range of containerized goods, from bananas to clothing and cars.

Retailers in recent months have ramped up holiday imports and are moving other shipments to the US West Coast where possible.

“We expect the strike itself to last five to seven days until government intervention … but the ripple effect is likely to be felt across the network in Europe, in Asia at least until January, February,” he said Peter Sand, Chief General. analyst at shipping pricing platform Xeneta.

Barclays researchers said they expected European carmakers such as BMW, MercedesMBGn.DE, VolkswagenVOWG_p.DE and VolvoVOLCARb.ST to be among the auto companies whose imports would be affected, but noted that relatively high inventories would cushion the immediate impact.

Automakers Hyundai and GM said they were monitoring the strike and had contingency plans in place.

There are nearly 100,000 containers waiting to be unloaded at New York-area ports alone, now frozen by the strike, and 35 container ships are headed to New York next week, said Rick Cotton, the Port Authority’s executive director. from New York. and New Jersey.

The union “holds the whole country over a barrel,” said Steve Hughes, CEO of HCS International, which specializes in automotive supply and transportation. “I’m very afraid it will be ugly.”

The dispute also puts pro-labor US President Joe Biden in a virtual no-win position, while Vice President Kamala Harris leads a tight race against former Republican President Donald Trump.

White House chief of staff Jeff Zients and top economic adviser Lael Brainard urged USMX board members at a meeting Monday to resolve the dispute fairly and quickly, a U.S. official said. White House. But the Biden administration has repeatedly ruled out using federal powers to break a strike in the event of a deadlock.

US Chamber of Commerce President Suzanne Clark on Monday urged Biden to reconsider, saying “it would be unacceptable to allow a contract dispute to cause such a shock to our economy.”

The White House said in a statement Tuesday that it is monitoring the effects on the supply chain “and evaluating ways to address potential impacts,” noting that the initial effect on consumers is expected to be limited.

Officials told Reuters on condition of anonymity that they hoped for a short strike, pointing to a sign that the two sides had resumed talks late on Sunday and narrowed their differences on Monday.

The U.S. Department of Agriculture said Tuesday it does not expect “significant changes in food prices or availability in the near term.”

Economists at Capital Economics said the strike was “unlikely to trigger major economic disruption”, although they added that a prolonged shutdown would force Biden to step in if the two sides cannot reach an agreement.

BACKUP PLANS

Retailers that account for about half of container shipping volume have been busy implementing back-up plans as they head into their big winter holiday sales season.

Many of the big players rushed to get Halloween and Christmas goods in early to avoid any strike-related disruptions, incurring extra costs to ship and store those goods.

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

New York Gov. Kathy Hochul said the state does not expect any immediate impact on the food supply or essential goods, but said the impact could expand depending on how long it lasts.

“It is critical for USMX and the ILA to reach a fair agreement soon that respects workers and ensures a flow of commerce through our ports,” she said Tuesday.

Maersk shares fell nearly 5 percent in Copenhagen on Tuesday, profit-taking on recent gains as investors expected significant increases in freight rates due to the strike, which would boost the shipping companies’ earnings.

The Danish company said it would introduce a port disruption surcharge on all cargo moving to and from US East Coast and Gulf Coast terminals from October 21, ranging from $1,500 to $3,780 per container.

(Reporting by Doyinsola Oladipo; Additional reporting by Gursimran Kaur, Nilutpal Timsina, Shivani Tanna and Shubham Kalia in Bengaluru, David Shepardson in Washington and Stine Jacobsen in Copenhagen; Writing by Richard Valdmanis and Miyoung Kim; Editing by Christian Schmollinger, Miral Fahmy, Peter Graff and Chizu Nomiyama)

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UNITED STATES OF AMERICA