After the Logistics Crisis, the Global Economy Is Facing Another Threat: A Massive Strike in U.S. Ports

For the first time since 1977, longshoremen on the East Coast have called for an indefinite strike to protest their working conditions. The strike could also shock the national economy and the presidential election. In addition, the blockade of the East Coast ports is a new problem for the global supply chain after the logistics crisis a few years ago.

What are they asking for? The 45,000 longshoremen working at more than 36 ports along the entire East Coast and Gulf of Mexico demand a 77% wage increase (equivalent to $5 an hour per year) over the next six years. This amount is far less than the $116,000 a dockworker on the West Coast earns for the same type of workThe International Longshoremen’s Association (ILA) represents these workers and released a statement outlining the group’s demands.

In addition, the dockworkers want a commitment from port operators to stop any automation of loading and unloading operations that would eliminate jobs. “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 Quartz.

What are they offering? On the other hand, the United States Maritime Alliance (USMX), formed by the shipping industry and port operators, has agreed to maintain the provisions of the current agreement. According to CBS News, it prohibits the automation of port facilities and automated equipment in future contracts.

The USMX was less flexible on salaries, offering a wage increase of up to 50% over the next six years, which fell far short of dockworkers’ expectations. The port employers also promised to improve pension contributions and employee health insurance.

How much do the striking dockworkers make? According to CBS News, one of the triggers for the strike is the wage disparity between East Coast and West Coast dockworkers. The employees represented by the ILA have a base wage of $39 an hour after six years on the job ($20 if they have less than six years). Their West Coast counterparts, meanwhile, have a wage of $54.85 an hour, rising to $60.85 in 2027. In the U.S., the minimum wage is $15 per hour.

For a 40-hour workday, a longshoreman on the East Coast would earn $81,000 annually. This amount is far less than the $116,000 a dockworker on the West Coast earns for the same type of work.

How will this strike affect the U.S. economy? Grace Zimmer, an economist at Oxford Economics, told the BBC that the strike’s impact could cost the U.S. economy between $4.5 billion and $7.5 billion per week. Fox Business reported that J.P. Morgan’s estimates were much more pessimistic, suggesting losses of between $3.8 billion and $4.5 billion per day if the strike drags on due to disrupted operations. A report by MITRE, a logistics consulting firm, estimated losses of about $640 million per day in New York Harbor alone if the strike continues beyond 30 days.

According to the BBC, the ports affected by the strike handle about 14% of agricultural exports and more than half of banana and chocolate imports. In total, that would be 68% of containerized exports and about 56% of containerized imports, according to CBS News.

The White House takes a back seat. The strike takes place in the final weeks before the presidential election, a delicate time for political leaders. The White House has called on both sides to resolve the conflict as soon as possible.

According to Forbes, President Joe Biden could invoke the Taft-Hartley Act, which would delay the strike for up to 80 days. However, Biden has preferred not to use it because “it’s collective bargaining, and I don’t believe in Taft-Hartley.”

Will there be a supply chain crisis? The dockworkers strike comes on top of growing supply chain tensions, which have been struggling to return to normal since the blockages caused by the COVID-19 pandemic. “The congestion and delays at these major ports will severely impact the availability of containers, increase costs, and disrupt schedules,” Container xChange CEO Christian Roeloffs said on LinkedIn.

According to MITRE, the blockade would increase transportation costs by lengthening sea and land routes. This, in turn, would raise import and export prices for goods. It would also delay the delivery of goods, which is of particular concern to retailers as the holiday season approaches.

“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,” Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, told CBS News.

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