Potential Strike of Union Workers at U.S. Ports

(Reuters) – Approximately 45,000 union workers could strike at seaports on the U.S. East and Gulf Coasts starting October 1, disrupting vital trade just weeks before the presidential election.

A JPMorgan analysis estimates the strike’s impact could reach $5 billion daily on the U.S. economy. This would affect 36 ports handling about half of the country’s ocean imports, causing shortages of goods such as bananas, clothing, and cars, resulting in extended backlogs at ports. Additionally, shipping costs may rise, impacting voters already facing housing and food inflation.

The Core Issue

The International Longshoremen’s Association (ILA) union, which represents workers from Maine to Texas, and the United States Maritime Alliance have reached an impasse over pay. The current six-year contract expires at midnight on September 30.

A strike at all East Coast and Gulf of Mexico ports would mark the ILA’s first since 1977. The White House has indicated it won’t intervene as it did previously during West Coast negotiations, and administration officials noted that President Biden would not use federal powers to block a strike.

Impact on Industries

Longshoremen’s Role

Longshoremen, or stevedores, manage cargo from incoming ships, mostly on container ships, and also on car carriers and cruise ships. They handle cranes for loading and unloading, secure cargo, and manage related paperwork.

Auto Imports

Ports covered by the ILA contract accounted for $37.8 billion in vehicle imports in the past year, with Baltimore leading in car shipments. Key auto parts imports from Europe are especially constrained, complicating rerouting efforts compared to those from China.

Additionally, ports lead U.S. imports of machinery ($97.4 billion), fabricated steel ($16.2 billion), and precision instruments ($15.7 billion).

Agricultural and Pharmaceutical Imports

A strike could jeopardize 14% of U.S. waterborne agricultural exports and 53% of imports, with potential weekly losses exceeding $1.1 billion. Key imports include bananas, coffee, and cocoa, while exports encompass soy products and meat.

The ports also manage over 91% of U.S. pharmaceutical containerized imports. Many lifesaving medications originate from the Norfolk, Virginia port and Charleston, South Carolina port.

Other Consumer Goods

Retailers, responsible for half of container volumes, are preemptively increasing shipments of holiday goods. The affected ports handle over $32.8 billion in apparel and $23.4 billion in furniture.

While Gulf Coast ports are significant for oil and gas, they would largely remain unaffected by a strike impacting container cargo. The ILA plans to continue handling military cargo and passenger cruise ships.

Delays and Cost Increases

A strike would lead to elevated shipping costs and prolonged delays. For instance, the top five ports – New York/New Jersey, Savannah, Houston, Norfolk, and Charleston – managed over 1.5 million TEUs valued at $83.7 billion in August. Disruptions from a walkout would begin immediately, intensifying trade rates across the U.S. economy.

Sea-Intelligence analysts suggest that clearing backlogs from a one-day strike could take four to six days. Maersk, a major ocean transport provider, warned that a week-long strike could necessitate up to six weeks for recovery, compounding delays day by day.