Striking longshoremen have closed ports on the East Coast of the USA

The union representing thousands of longshore workers from Maine to Texas began a strike Tuesday over wages and the use of automation, closing seaports in work stoppages that could cause major disruptions to trade and the national economy.

It was the first strike since 1977 for the International Longshoremen's Assn., whose 47,000 members handle cargo operations at three dozen East and Gulf Coast ports that receive about half of U.S. imports. And it comes at a delicate time economically and politically, as the country emerges from a period of high inflation and is just a month away from national elections.

If the strike ends quickly, it is not expected to have a major impact on businesses or consumers. Many retailers shipped products earlier than usual and built up inventories to await industrial action. Some importers have moved goods by air and others have diverted cargo to the West Coast, contributing to increased traffic at the ports of Los Angeles and Long Beach, the busiest container complex in the United States

But with each passing day, economists estimate that this will result in billions of dollars in trading losses, although some of them would be recouped later. And if ports remain closed for more than a week or two, the American economy will have a larger and more widespread impact.

At first, the impact could be relatively small and even unnoticeable to most consumers because products like European wine and perishable goods like bananas cost more, said Jason Miller, a supply chain management expert at Michigan State University. But after a few weeks, he said, automakers that produce cars in the U.S. could be forced to cut production or even impose temporary layoffs if they can't get enough imported parts and components.

“There is only a limit to what the system can withstand. You can only distract so much,” Miller said.

Decommissioned cranes and shipping containers are seen in Port Jersey during a port strike in Bayonne on October 1, 2024.

(Eduardo Munoz Alvarez/Associated Press)

The Biden administration has said it is not considering invoking the Taft-Hartley Act of 1947 to break a strike. But analysts say they will have little choice if the strike is not resolved soon, given the potential economic and political damage it could cause.

The ports of Los Angeles and Long Beach combined had their busiest August ever this August, and both ports have been preparing for increased cargo volumes in advance of the strike. West Coast longshoremen are represented by another union that agreed to a new contract last year.

“West Coast port operators have learned to operate under intense pressure as trade reopens after pandemic-era distortions,” said Joseph Brusuelas, chief economist at tax and advisory firm RSM US. “We believe this will partially mitigate some of the issues that will negatively impact trading volumes for the duration of the industrial action.”

Brusuelas estimated that the strike would affect about $1.3 billion in exports and $3 billion in imports daily, still a modest figure given the size of the American economy. “The main industries affected by this measure will be local transport and storage and import of cars,” he said. “Agricultural goods, coal and petroleum will have the greatest impact in the short term.”

The impacts are greatest in places that host or support the largest ports along the Atlantic and Gulf coasts, including New York-New Jersey; Savannah, Georgia; Houston; and Charleston, S.C. But businesses in California expect it will also affect them and consumers on the West Coast.

Third-generation longshoreman Ray Bailey Jr., trustee of ILA Local 1291, encourages picketing in front of the Packer Avenue Marine Terminal Port in Philadelphia.

(Ryan Collerd/AP)

“If we have learned anything at all from previous supply chain disruptions, it is that the impact on consumers is resulting in higher costs for goods such as clothing, fruits and vegetables and medical supplies,” said Patty Tschaepe, president of Los Angeles Customs Brokers and Freight Forwarders Assn .

Longshoremen began picketing after their six-year contract with the United States Maritime Alliance expired at midnight.

The alliance, which represents shipping companies and terminal operators at the ports, said late Monday that both sides had exchanged offers in what appeared to be a final attempt to avert a strike. According to published reports, the union is pushing for wage increases of 77% over six years. The maritime alliance announced on Monday that it had offered almost 50%.

Top longshoremen earn a base salary of $39 per hour. The union also takes strong action against employers who want to use robotics and other labor-saving technologies. The alliance said on Monday that it had offered to keep the current language on automation and semi-automation.

The union said in its latest statement released Monday that the shipping companies, most of which are foreign-owned, have made billions in profits at the expense of union workers whose wages have been eroded by inflation.

Neither side immediately commented Tuesday.