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US business groups warned of economic “paralysis” just five weeks before the presidential election as tens of thousands of dockworkers went on strike on Tuesday, shutting ports along the east and Gulf coasts.
Dockworkers represented by the International Longshoremen’s Association walked out of major US ports for the first time in almost five decades after their employment contract expired at midnight. Negotiations for a new contract, which covers about 25,000 ILA workers, have been at an “impasse” for months over pay and automation, according to the United States Maritime Alliance (USMX), which represents the employers.
“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” ILA president Harold Daggett told picketing members in New Jersey on Tuesday.
The three dozen affected ports, which stretch from Maine to Texas, together handle one-quarter of the country’s international trade, worth $3tn a year, according to The Conference Board.
The business group warned on Monday that the work stoppage would “paralyse US trade”, halting imports of food, pharmaceuticals, consumer electronics and clothing. The union said it would continue to handle military cargo.
The closure represents the latest disruption to global supply chains, which have been strained by a drought that limited traffic through the Panama Canal and by attacks by the Houthi militant group in Yemen that forced vessels out of the Red Sea.
JPMorgan analysts estimated that the strike could cost the US economy as much as $4.5bn a day, but said they did not expect it to last longer than a week.
“A disruption of a week or two will create some backlogs but the broader consequences will be minimal outside of a handful of very port-reliant areas, including Savannah, Georgia,” said Moody’s Analytics economist Adam Kamins.
“But anything longer will lead to shortages and upward price pressures. This would prove especially problematic for food and automobiles, which rely especially heavily on the ports that will be shut down.”
The White House said President Joe Biden was “closely monitoring” the strike and had been briefed that its effects on consumers were expected to be “limited at this time, including in the important areas of fuel, food, and medicine”.
Biden piled pressure on employers’ representatives to make concessions, saying he had urged the USMX to present “a fair offer” to port workers that reflects “the substantial contribution they’ve been making to our economic comeback”.
The president has declined to invoke a 1947 federal law that would allow him to break the strike, rebuffing repeated calls from business leaders for him to intervene.
“Americans experienced the pain of delays and shortages of goods during the pandemic-era supply chain backlogs in 2021,” said Suzanne Clark, chief executive of the US Chamber of Commerce, hours before the strike began. “It would be unconscionable to allow a contract dispute to inflict such a shock to our economy.”
The dockworkers’ union had blamed ocean carriers “gouging their customers” for a dramatic rise in freight prices in the lead up to the strike. Its members had been “crippled by inflation”, it added, but USMX had offered an “unacceptable wage package”.
On Tuesday the union said that it was demanding a $5 per hour pay increase in addition to “absolute airtight language that there will be no automation or semi-automation”. ILA members earned between $20- $39 an hour under the old contract.
In a statement on Monday, USMX said that it had increased its pay offer and requested an extension of the current contract. “We are hopeful that this could allow us to fully resume collective bargaining around the other outstanding issues — in an effort to reach an agreement,” the group said.
