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US business groups warned of economic “paralysis” just weeks before the presidential election as tens of thousands of dockworkers went on strike on Monday, shutting ports along the US 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 on Tuesday. Negotiations for a new contract, which covers about 25,000 workers, have been at an “impasse” for months over wages 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,” said ILA president Harold Daggett, calling for the USMX to “meet our demands for this strike to end”.
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 an analysis by 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 $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 in a statement Tuesday that President Joe Biden is “closely monitoring” the work stoppage and was “briefed on Agency assessments that show impacts on consumers are expected to be limited at this time, including in the important areas of fuel, food, and medicine.”
Biden reiterated that he wanted the parties “to come to a fair agreement” on their own, rebuffing calls from business leaders to invoke a 1947 federal law that would allow him to break the strike.
Business groups had repeatedly asked Biden to intercede in the labour dispute, saying that a ports closure would shake the economy just five weeks before the presidential election.
“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 blamed ocean carriers for a dramatic rise in freight prices in the lead up to the strike, saying in a statement on Monday that the shipping lines were “gouging their customers”.
It also said that it was striking because its members were “crippled by inflation” and USMX had offered an “unacceptable wage package.”
“They don’t care about us,” said Daggett. “They would love to see automation up and down the whole east and Gulf coast.”
“Trust me when I tell you that if it was up to them, we would have no jobs. There is a job we have to do right now, and it is the strike.”
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.
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