Price increases could be on the horizon if dockworkers and port operators fail to reach terms on a labor contract before Tuesday, Oct. 1. The stoppage at 36 ports along the eastern seaboard and in the Gulf of Mexico would be the first for maritime workers in nearly 50 years.
Members of the International Longshoremen’s Association and the United Maritime Alliance, which negotiates on behalf of port operators, have been locked in negotiations for months.
The 85,000 longshore workers have been calling for higher wages and a ban on automating cranes, grates, and moving containers as part of the loading and unloading process.
Contract offers haven’t been made public by either side, but a trade publication reports the union is seeking a $5-per-hour raise for each year of the 6-year contract, while the alliance has offered an annual raise of $2.50.
The union president said the offer was “insulting.”
“I think that the dilemma that we have is that the longshoremen, they’ve always been a strong union, and so they realize that if you automate, you’re going to take away their jobs,” said Patrick Penfield, a professor of supply chain practice at Syracuse University. “This is the conundrum that we’re in. Ideally, we should be automating to streamline operations, to be able to move things in and out. But unfortunately, automation does come at a price from a job standpoint, and there will be [fewer] jobs on the ports if you automate. This is kind of the sticking point.”
Penfield said it will take some time for customers to feel the sticker shock of a stoppage, but the longer the strike goes on, the more likely it will be to see higher prices.
“You’re going to see an increase in pricing rates, trucking rates,” he said. “So you’ll see congestion again, rates will go up. You’re going to see issues with food because there’s a lot of food that goes through the East Coast ports, so in order to get that food, you’re going to have to air it in. And if you air anything these days, it’s going to cost a lot more money.”
President Joe Biden has the power to force workers back on the job if they choose to strike. Congress did stop a rail workers strike in 2022 at the urging of the White House. But about a month before the election, Biden said he’s not planning to intervene at this time. Instead, the administration has called on both sides to come up with a negotiated solution.
The National Retail Federation called on the Biden administration to keep engaging with both sides.
“Many retailers have already taken steps to mitigate the potential impact of a strike by bringing in products earlier or shifting products to the West Coast,” NRF Vice President of Supply Chain and Customs Jonathan Gold said in an email to Straight Arrow News. “The global supply chain is a complex system and even a minor disruption would have a negative impact and cause delays at a critical time for both retailers and consumers.”
Penfield said Biden staying out of it is a “smart move” for now. But the longer a strike drags on, the more likely Biden will have to get involved.
“Eventually, if it goes on too long, I think they have to step in, just because this would cause some major issues and problems within the whole country,” he said. “So I give it at least five days. I think after five days, then I think the government really needs to step in.”
A strike would have a huge impact on the economy.
J.P. Morgan transportation analysts estimate a strike could cost as much as $5 billion per day. The longer it goes on, the more the costs pile up. For each day ports are shuttered, it takes around five days to clear the extra containers.