U.S. dockworkers tentatively ended their strike on Oct. 3 and agreed to return to work today as negotiations for a long-term contract resume.
The International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) agreed to extend the contract through Jan. 15, 2025, according to a joint news release on Oct. 3. A new master contract will include a 61.5% pay increase, which is part of the tentative agreement reached Oct. 3, over the next six years, Baltimore-based ILA Local 333 President and ILA nationwide vice president Scott Cowan told CBS Baltimore.
The three-day strike will have lasting implications, with economic damage estimates of $3 billion a day including money lost due to spending and production issues, according to Bloomberg Economics.
In addition, it will likely take more than a month to clear the cargo backlog and restore the supply chain, according to Chicago-based supply chain data firm project44. After a one–day strike on the West Coast in 2023, ports took three weeks to clear the container backlog, resulting in an increase in dwell, or idle, times of up to 148%. The issue of vessels remaining at sea persisted into Friday morning, with 37 container vessels still waiting to reach ports in the East and Gulf coasts as of 9:30 a.m. ET, according to ship tracking data on Kuehne+Nagel’s seaexplorer website.
Presidential pressures
Despite pressure from both sides for President Joe Biden to intervene during recent talks and the port strike, Biden remained neutral, commending both sides as well as the collective bargaining process in a statement released by the White House on Oct. 3.
“Today’s tentative agreement on a record wage and an extension of the collective bargaining process represents critical progress towards a strong contract,” he said. “I congratulate the dockworkers from the ILA, who deserve a strong contract after sacrificing so much to keep our ports open during the pandemic. And I applaud the port operators and carriers who are members of the US Maritime Alliance for working hard and putting a strong offer on the table.”
In addition, Biden highlighted the importance of ports in the recovery efforts following Hurricane Helene’s damage across the southeastern U.S., including many port cities.
The extension moves the next deadline until after the Nov. 5 presidential election.
“There are still risks a final deal can’t be reached, at which point a strike could resume,” according to a Bank of America research note. “The U.S. president retains the power to send workers back for 80 days under Taft-Hartley, and use of that power may be less complicated after the November election.”
Since the extension ends before Inauguration Day on Jan. 20, another failure to reach a contract agreement would come at a period of executive limbo.
Bumpy seas could still lie ahead for US dockworkers
The ILA still intends to negotiate and seek vital deal components beyond the pay raise, according to an Oct. 2 USMX release.
“USMX’s goal continues to be focused on ratifying a new Master Contract that addresses all the critical issues the parties need to bargain,” it stated in the release. “We cannot agree to preconditions to return to bargaining — but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns.”
Other issues to address in the final contract include automation, the ILA’s Cowan said.
“We’re going to receive a 61.5% 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,” he said.
Potential economic impact beyond US dockworkers
The lack of a contract raises economic concerns for more than the US dockworkers and port operators. Another port strike would put thousands of truckers out of work and affect the livelihoods of truckers already burdened by low freight rates, according to an Oct. 2 release by the American Trucking Association (ATA).
“In the port of NY/NJ, 30,000 truckers are registered to work, and 12,000 truck visits typically take place every day,” the release stated before the contract extension. “Tens of thousands of more up and down the coasts are now sidelined by this strike.”
With the port strike coming on the heels of Hurricane Helene, which had already limited access to many East Coast ports, more pressure was placed on the U.S. economy, ATA President and Chief Executive Chris Spear said in an Oct. 3 statement.
“We are glad to see the strike has ended, but it should have never happened in the first place,” he said. “This failure was not without cost, impacting real Americans, including millions reeling from a natural disaster.”
In addition, a strike could have cost U.S. agriculture more than $1 billion, Daniel Munch, economist at the American Farm Bureau Federation, said in a Sept. 25 release.
“With more than $1.4 billion in containerized agricultural goods passing through East and Gulf Coast ports each week, a strike would create backlogs of exports, denying farmers access to a higher price in the world market, leading to a domestic oversupply, driving down prices for key commodities,” he said. “On the import side, shortages and delays would raise costs for consumers — particularly for perishable goods.”
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