By Doyinsola Oladipo and David Shepardson
NEW YORK (Reuters) – Port workers on the U.S. East Coast and Gulf Coast began their first large-scale strike in nearly 50 years on Tuesday, halting the flow of about half the nation’s shipping, after negotiations for a new labor contract collapsed over wages.
The strike is blocking everything from food to car shipments through dozens of ports from Maine to Texas, a disruption that analysts warn will cost the economy billions of dollars a day, threaten jobs and potentially trigger inflation.
President Joe Biden and his administration have repeatedly said they will not use federal powers to end the strike, and on Tuesday pressed dockworkers’ employers to increase their contract offer to reach a deal.
A source familiar with the talks said the two sides were talking to each other, but there was no active bargaining late Tuesday and the strike appeared to be heading into a second day.
The International Longshoremen’s Union, which represents 45,000 dockworkers, had been negotiating with the US Maritime Alliance (USMX) employer group for a new six-year contract ahead of a midnight deadline Monday.
The Department of Lands said in a statement that it closed all ports from Maine to Texas at 12:01 a.m. EDT (0401 GMT) after rejecting USMX’s final proposal, adding that the offer “falls well short of its members’ demands to ratify a new contract.” . .
International Labor Association leader Harold Daggett said employers such as container ship operator Maersk and its subsidiary APM Terminals North America had not offered adequate wage increases or agreed to demands to stop port automation projects that threaten jobs.
“We are prepared to fight as long as necessary, to stay off strike for any length of time, to get the wages and protection against automation that our ILA members deserve,” Daggett said Tuesday.
“Our current offer of a nearly 50% wage increase goes beyond every other recent union settlement, while addressing inflation and recognizing the hard work the Labor Law Association is doing to keep the global economy going,” USMX said in a statement.
The union is pushing for more, including a $5-an-hour raise for each year of the new six-year contract, Daggett said.
The White House commented that it was time for USMX to negotiate a fair contract for workers.
“Shipping companies have achieved record profits since the pandemic and, in some cases, have seen profits exceed 800%,” White House press secretary Karine Jean-Pierre said, referring to the boom in demand for shipping since the Covid-19 pandemic. Sea freight since the Covid-19 pandemic. .
“It is only fair that workers who are putting themselves at risk during the pandemic to keep ports open should see a significant increase in their wages as well.”
Acting Labor Secretary Julie Su said the employer group “refused to put an offer on the table that reflects workers’ sacrifices and contributions to employers’ profits.”
“The parties must return to the negotiating table, and that must start with these giant shipping magnates recognizing that if they can achieve record profits, their workers must share in that economic success,” she added.
The dispute pushes the pro-labor Biden into a virtually winless position, with Vice President Kamala Harris in a razor-thin race for the White House with former Republican President Donald Trump in the November 5 election.
Trump on Tuesday blamed the strike on inflation, which he said was caused by the Biden-Harris administration.
“Everybody understands the dockworkers because they took down this inflation, just like everyone else in our country and abroad,” Fox News Digital quoted Trump as saying in an interview.
Higher costs
The strike, the ILA’s first major outage since 1977, is worrying companies that rely on sea shipping to export their goods or secure vital imports. It affects 36 ports — including New York, Baltimore and Houston — that handle a range of containerized goods from bananas to clothing to cars.
Transportation Secretary Pete Buttigieg on Tuesday called on shipping companies to withdraw additional fees they may impose in the wake of the strike. USMX declined to comment.
The strike could cost the US economy nearly $5 billion a day, according to estimates by JPMorgan analysts.
French shipping group CMA CGM, the world’s third-largest container shipping company, on Tuesday issued a force majeure notice over the strike and said it may impose additional shipping fees on delayed ships.
The National Retail Federation called on the Biden administration to use its federal authority to stop the strike, saying a strike could have “devastating consequences” for the economy.
Republicans, including Virginia Governor Glen Youngkin, also called on Biden to end the strike, warning of its impact on the economy.
The USDA said Tuesday it does not expect significant changes in food prices or availability in the near term.
Grocery chain owner Ahold Delhaize also said he expects little short-term impact on his supply chain.
Backup plans
Hundreds of dock workers demonstrated at a New York City-area freight station in Elizabeth, New Jersey, holding signs and chanting slogans while music played and vendors sold food. Daggett arrived to rally them with chants of “ILA all the way!”
“Everything that comes into this country comes from the containers on these ships that my men work on. And I want the world to know that. Don’t come after us and say we’re greedy. Go after these greedy bastards who own these companies in Europe,” Daggett told reporters.
Retailers account for about half of total container shipping volume, along with other shippers, and are busy implementing backup plans to minimize the impact of the strike as they head into the winter holiday sales season.
Many major players rushed to purchase Halloween and Christmas merchandise early to avoid any strike-related disruptions, incurring additional costs to ship and store those merchandise.
Retail giant Walmart (NYSE:), the largest U.S. container shipping company, and membership warehouse club operator Costco (NASDAQ:) say they are doing everything they can to mitigate any impact.
Meanwhile, Danish pharmaceutical company Novo Nordisk (NYSE:) said it has alternative plans to minimize or prevent any interruptions in its production, including using air freight, CNBC reported Tuesday, citing a company spokesperson.
Lars Jensen, CEO of shipping consultancy Vespucci Maritime, said the strike was unlikely to lead to any severe shortages, but could increase costs for consumers if prolonged.
“Ultimately, the only person who will end up paying the bill for this is the American consumer, as simple as that, because import costs will rise and those costs will be passed on to all the importers.” Products,” he said.
More than 38 container ships were waiting at anchor near U.S. ports by Tuesday, compared to just three on Sunday, according to Everstream Analytics.