Dockworkers Strike Shuts Down 36 Ports from Maine to Texas, Raising Fears of Supply Chain Disruptions

Dockworkers at ports from Maine to Texas began walking picket lines early Tuesday in a strike over wages and automation that could potentially rekindle inflation and cause shortages of goods if it continues for more than a few weeks. The contract between the ports and about 45,000 members of the International Longshoremen’s Association expired at midnight. Despite reports of progress in talks on Monday, the workers went on strike, marking the first by the union since 1977.

The strike is affecting 36 ports across the East and Gulf coasts, and workers began picketing at the Port of Philadelphia shortly after midnight. They marched in a circle at a rail crossing outside the port and chanted demands for a fair contract. The union had message boards on the side of a truck reading: “Automation Hurts Families: ILA Stands For Job Protection.” Local ILA president Boise Butler stated that workers want a fair contract that protects against automation replacing their jobs.

According to Butler, shipping companies profited heavily during the pandemic by charging high prices, and now the workers want compensation in return. “They’re going to pay back,” he said. The union, he emphasized, will continue the strike as long as necessary, adding that it holds leverage over the companies due to the critical role the ports play in the nation’s economy.

At Port Houston, around 50 workers started picketing at midnight local time, holding signs that echoed the demand: “No Work Without a Fair Contract.”

The U.S. Maritime Alliance, representing the ports, mentioned on Monday evening that both sides had adjusted their wage offers, but a deal remained out of reach. The union’s initial offer was a 77% pay raise over a six-year contract to offset inflation and years of small increases. ILA members have a base salary of around $81,000 per year, though some can earn over $200,000 annually with significant overtime.

By Monday evening, the alliance had increased its offer to a 50% raise over six years and committed to maintaining the limits on automation agreed to in the previous contract. However, the union is pushing for a complete ban on automation. It is unclear how far apart both sides still are. The alliance expressed hope that the progress on wages could pave the way for negotiations on other issues and lead to an agreement.

Early Tuesday, the union rejected the alliance’s proposal, claiming it “fell far short of what ILA rank-and-file members are demanding in wages and protections against automation.” The two sides had not engaged in formal negotiations since June. ILA President Harold Daggett declared, “We are prepared to fight as long as necessary to secure the wages and protections our members deserve.”

The alliance stated that its offer included tripled employer contributions to retirement plans and enhanced healthcare options. Analysts warn that while consumers won’t see immediate effects, prolonged disruptions could severely impact the nation’s supply chain, leading to higher prices and delayed shipments of goods.

If the strike continues beyond a few weeks, businesses may be forced to absorb costs for delays, and products could arrive late for the holiday shopping season, affecting items ranging from toys to cars and perishable goods like coffee and fruit. The ports involved handle 3.8 million metric tons of bananas annually, accounting for 75% of the nation’s supply, according to the American Farm Bureau Federation.

The strike could also create bottlenecks for exports and push traffic to the West Coast, where ports are operated by a different union. Although railroads claim they can increase their capacity to carry more freight from the West Coast, analysts argue they can’t fully compensate for the loss of capacity on the Eastern seaboard. The strike could lead to long-term disruptions if it is not resolved soon. “If the strikes go ahead, they will cause enormous delays across the supply chain, a ripple effect which will no doubt roll into 2025 and cause chaos across the industry.”

J.P. Morgan has estimated that a shutdown of East and Gulf Coast ports could cost the economy between $3.8 billion and $4.5 billion per day, with some losses recovered once normal operations resume. The timing of the strike, just weeks before a presidential election, has also raised concerns. Retailers, auto parts suppliers, and produce importers had hoped for a swift resolution or federal intervention using the Taft-Hartley Act, which allows the President to request an 80-day cooling-off period.

President Joe Biden, who has sought to appeal to union voters, stated on Sunday that he did not plan to intervene in the dispute. However, the White House has been in regular communication with both parties, urging them to resolve the situation quickly. Chief of Staff Jeff Zients and National Economic Council Director Lael Brainard convened the alliance’s board members on Monday to emphasize the importance of a fair and swift settlement that reflects the success of shipping companies and the contributions of union workers.

With the strike now underway, the outcome of the negotiations will be critical for the broader economy, and both sides will need to find common ground to avoid a prolonged disruption that could ripple through the supply chain and impact consumers across the country.