Dockworkers Head back to Work
Ports are reopening today, as the longshoremen’s union agreed with terminal operators and shipping liners to extend their previous contract through January 15.
U.S. dockworkers agreed to end a three-day strike that had paralyzed trade on the U.S. East and Gulf coasts and threatened to become a factor in the presidential election.
The International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) extended their previous contract through January 15, the two groups said in a joint statement Thursday. Ports are opening Friday, and the two sides will restart negotiations on a long-term agreement, which will include a pay increase of about 62 percent.
Fears of a sustained emergency swelled through the week, with analysts and industry officials warning that the disruption would quickly extend beyond the container imports, exports, and autos impacted directly by the walkout. Estimates of the cost to the U.S. economy ranged from $3 billion to $5 billion a day.
“The strike is over,” ILA Local 333 President Scott Cowan told a CBS affiliate just after delivering the news to members gathered at the picket line outside the Port of Baltimore.
The agreement gives the ILA and USMX—as the group of terminal operators and shipping liners is known—time to resolve even more contentious issues without threatening the U.S. economy just weeks ahead of the election.
Shares of shipping lines in Asia fell as the suspension of the strike dampened expectations that container rates would rise due to reduced capacity. Copenhagen-based A.P. Moller-Maersk A/S dropped as much as 8.6 percent, while Hapag-Lloyd AG of Hamburg, Germany, sank almost 14 percent.
“We’re going to receive a 61.5 percent increase over the next six years, and we’re going to have other language to protect us from automation worked out over the next few months, and other issues that we need resolved,” Cowan said.
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Crises Averted
Americans had started to panic over potential shortages. Some anxious shoppers stocked up on goods, especially in areas affected by Hurricane Helene, which hit several Southeastern states with flooding and power outages. One national grocery store chain set purchase limits on paper towels, toilet paper, and water, adding to pressure on President Joe Biden to intervene.
The deal neutralizes a potential political issue for the White House and the campaign of Vice President Kamala Harris. A prolonged strike would have forced her to confront a crisis that fueled inflation.
It also spares Biden from having to put any public pressure on the ILA as he and Harris fight Republican nominee Donald Trump for the support of union’s rank-and-file members. A deal, however temporary, means Biden won’t have to decide whether to bear the political burden of a crippling strike or distance himself from the demands of the union.
“American consumers really won’t see any effect,” Lael Brainard, director of the White House’s National Economic Council, said in an interview Friday with Bloomberg Television. Now that the contract has been extended, both sides can “roll up their sleeves to really address the remaining issues on the table, having solved the wage piece,” she said.
Even though the strike lasted just three days, the cargo backlog is likely to take more than a month to clear, according to project44, a supply-chain data company in Chicago. Port terminals began battening down the hatches days ahead, and it will take them a while to fully reopen.
The Port of New York & New Jersey said vessel activity will resume on Friday night. In Georgia, with ports in Savannah and Brunswick, business will begin to function Friday morning. The Port of Virginia said it will take about 24 hours to restore operations and will offer weekend hours for cargo pickup and delivery.
In the meantime, dozens of ships carrying containers and autos that anchored off the coast of major trade hubs may continue arriving faster than they can be unloaded. As of early Friday, there were more than 30 container ships and car carriers anchored off the coast of Texas, Georgia, South Carolina, Virginia, and New York, according to ship-tracking data compiled by Bloomberg.
“The Sooner They Reach a Deal, the Better”
Biden, who sided with the union, commended both sides and linked the port closures to hurricane recovery efforts. “I want to thank the union workers, the carriers, and the port operators for acting patriotically to reopen our ports and ensure the availability of critical supplies for Hurricane Helene recovery and rebuilding,” he said in a statement Thursday after the deal was announced. “Collective bargaining works.”
Retailers, agricultural exporters, and the U.S. Chamber of Commerce have been sounding the alarm since the ILA called off negotiations with the USMX in June. Hundreds of industry associations had called on Biden to head off the strike even before it started.
The National Retail Federation applauded the decision to reopen ports while negotiations continue and said “it is critically important” that the two sides sign a final deal ahead of the new deadline, to prevent a repeat scenario in three months.
“The sooner they reach a deal, the better,” CEO Matthew Shay said.
While the ILA and USMX found common ground on wages, the remaining issues may prove to be thornier ones. ILA chief Harold Daggett has railed against the foreign-owned companies he says want to replace union jobs with robots, and says he won’t quit until language on technology in the next contract is tightened up. The companies have offered to leave it as is, which they see as a concession.
Biden expressed optimism about the strike suspension. “We’ve been working hard on it,” he told reporters Thursday evening. “By the grace of God and good will of neighbors, it’s going to hold.”
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