About 45,000 dockworkers on the U.S. East Coast and Gulf Coast are determined to stop automation and are threatening to strike on October 1, a move that would shut down ports that handle about half of the cargo handled by U.S. ships.
The International Longshoremen’s Union is demanding significantly higher wages and a blanket ban on automation of the cranes, gates and container movements used to load or unload cargo at 36 U.S. ports. Regardless of when and how the dispute is resolved, it will likely affect how cargo moves and leaves the U.S. for years to come.
If the strike is resolved within a few weeks, consumers probably won’t notice any major shortages of retail goods. But if the strike lasts a month or more, there will likely be shortages of some consumer goods, but most holiday retail goods have already arrived from overseas.
A prolonged strike would almost certainly hurt the U.S. economy. Even a short one would be disruptive. Traffic is likely to increase at key points across the country as cargo is diverted to West Coast ports where workers are based. Other unions not involved in the strike. And when the union eventually returns, there will likely be a remnant of ships. Experts say it takes four to six days to clear a port strike each day.
“I think everyone is a little bit nervous,” said Mia Zinter, North American ocean freight director for logistics firm CH Robinson. “This investigation into the ILA is at a level we’ve never seen before.”
The coastline is currently on strike
The union representing the ports and the American Maritime Federation have not met for negotiations since June, when the union first said it was suspending national talks to finalize a regional port agreement. No further national contract talks are scheduled.
Union leader Harold Daggett warned earlier this month that sailors were prepared to strike when their contract expires on September 30.
“We’re very far along,” Daggett said. “Mark my words: If we don’t get paid what we deserve, we’re going to close on October 1.”
Top-tier dockworkers currently earn a base wage of $39 an hour, or just over $81,000 a year. But with overtime and other benefits, some can earn more than $200,000 a year. Neither the union nor the port would discuss pay levels. But about a third of the crews working there earned more than $200,000, according to a 2019-2020 report from the Waterfront Commission, which oversees the Port of New York.
But Daegit argues that higher-paid sailors work up to 100 hours a week, much of it overtime, and sacrifice much of their family time in the process.
The union said it would resume negotiations and avoid the first nationwide strike for seafarers since 1977. The union accused the union of having already decided to strike.
“We must sit down and negotiate a new agreement that avoids a costly and damaging strike for both sides,” the union said in a statement.
In the case of a short-term strike, industry experts say consumers won’t notice any shortages in stores during the holiday shopping season, as most retailers have shipped goods ahead of the usual pre-holiday shipping season and are already in warehouses.
“There will be some inconvenience, but there will be no ‘Santa doesn’t show up,’” said Jonathan Chappell, senior managing director of transportation at investment research firm Evercore ISI.
Stifel transportation analyst Ben Nolan said port revenues are up 10% on the East Coast this year and 20% on the West Coast compared to 2023, indicating some cargo was moved in anticipation of the strike.
What does the election have to do with it?
Nolan suggested that the seafarers’ union could have some leverage heading into the presidential election, with memories of clogged ports and clogged supply chains still fresh. global pandemic of infectious disease Recession. Unions also got help this year. Political candidates targeting labor votes.
“If there was ever a time for workers to get what they want, it’s now,” Nolan said.
If the strike lasts more than a month, there could be temporary shortages of goods. Some manufacturers may have shortages of parts, especially the automotive and pharmaceutical industries, which do not usually keep large inventory of parts. Exports of automobiles and other goods through the East Coast could also be affected.
Most analysts see little chance of President Biden intervening as he did with Congress to stop a railroad strike in 2022, at least not before the Nov. 5 election.
Robinson of logistics firm CH Robinson noted that the administration cannot legally impose a contract on dockworkers before a strike. Still, if the strike is deemed to be a threat to national health or safety, Ginter said the president could seek a court order under the Taft-Hartley Act for an 80-day cooling-off period, which would halt the strike.
But Reuters reported Tuesday that an administration official said Biden had no intention of intervening to stop the strike. “We have never invoked Taft-Hartley to stop a strike and we are not considering doing so now,” the official said. “We encourage all parties to remain at the table and negotiate in good faith.”
Analysts say the union’s initial demands included a 77 percent pay rise over the six-year term of the contract. Union President Daggett said the significant pay increase would make up for the inflation spike of the past few years.
And he said it would give workers some of the billions the company has made, especially during the pandemic. Copenhagen-based Maersk, one of the world’s largest container shipping companies, has made more than $50 billion in profits over the past four years. But profits are expected to fall significantly in 2023 as pandemic-era consumer demand eases and sky-high freight rates fall again.
Automation is coming big time
Daegit said he expects union members to continue to wage their biggest fight against automation of port operations in the future.
“We don’t believe that robots should replace human jobs,” he said, “especially if those jobs have historically been done by humans.”
For example, he pointed to a gate at the Port of Mobile, Alabama, that has been in place since 2008 to automatically handle trucks without union labor.
The maritime union said it proposed maintaining current provisions banning fully automated terminals and blocking the use of semi-automated equipment without a bilateral agreement to protect human jobs as part of the new deal.
Experts say it’s unclear whether automation will lead to layoffs.
A 2022 study by the Los Angeles Economic Roundtable, funded by the West Coast Dockworkers Union, found that automation at partially automated terminals at the ports of Long Beach and Los Angeles resulted in the loss of 572 jobs annually in 2020 and 2021.
But another study conducted that same year by a professor at the University of California, Berkeley, at the request of port operators and shipping lines found that from 2015, when some automation was introduced at Los Angeles-area ports, the paid hours of unionized port workers increased by 11.2 percent through 2021.
At the giant port of Rotterdam, one of the world’s most automated, union workers have demanded early retirement packages and shorter working hours as a means of preserving jobs. And in the end, mechanization has not led to significant job losses, according to a researcher at Erasmus University in the Netherlands. Still, he predicted that automation could reduce port jobs by 25 percent in the future.
U.S. ports lag behind those in Asia and Europe in the use of automation. Analysts say U.S. ports take longer to unload container ships than their Asian and European counterparts, and without more automation, they could become less competitive. Eleftherios Iacobou, associate director of supply chain resilience at Texas A&M University, said carriers could send more cargo to ports in Mexico or Canada and then ship it back to the U.S. by rail or truck.
He suggested the two sides discuss using automation to augment the capabilities of human workers rather than replace them.
But the final reckoning with automation is still a long way off. For carriers to abandon U.S. ports, Mexican ports will have to become more efficient at the same time that U.S. ports are becoming “hugely inefficient,” Stifel’s Nolan said.
“I think there is some validity to that, but this is not a problem that will be solved in a few decades,” he said.
If a strike were to occur, analysts say West Coast ports could handle at least some of the additional cargo that would otherwise be diverted to East Coast ports, particularly from Asia. But they couldn’t handle it all. Nor could the U.S. rail system.
“The East Coast has grown so much,” Nolan said. “There’s no way around it.”
