Thousands of port workers along the US East Coast have gone on strike after failed negotiations over higher wages. This could cost the economy billions every day – with consequences also in Europe.
Thousands of dock workers along the US East Coast have gone on strike after negotiations for higher wages failed. This blocks all flows of goods – from food to clothing to car transport. According to experts, this could cost the US economy billions of dollars every day.
Jobs are also at stake. There are also fears of delivery bottlenecks and higher prices for consumers. The union “has the whole country in its hands,” said Steve Hughes, head of HCS International, a company that specializes in sourcing and shipping cars. “I’m really worried it’s going to get ugly.”
Domino effect will probably be noticeable until February
Experts fear that the effects could also be felt outside the USA. “We expect the strike to last five to seven days until the state intervenes. But the domino effect will likely be felt across Europe and Asia and at least until January, February,” commented Peter Sand, chief analyst at Norwegian market researcher Xeneta .
In the ports in the New York City area alone, almost 100,000 containers that are now blocked by the strike would have to be unloaded. And 35 more container ships are scheduled to head to New York next week, said Rick Cotton, executive director of the Port Authority of New York and New Jersey. None of them can be unloaded or reloaded while the workers are on strike.
First strike since 1977
The International Longshoremen’s Association (ILA), which represents 45,000 longshoremen, had negotiated a new six-year contract with employers’ group the United States Maritime Alliance (USMX), which ended ahead of the deadline at midnight on September 30. “Due to the expiration of the framework agreement between the United States Maritime Alliance (USMX) and the ILA, a work stoppage is occurring at the Port of Virginia and other ports along the East and Gulf Coasts of the United States,” the Virginia Port Authority said in a statement.
ILA Chairman Harold Daggett said employers such as container ship operator Maersk and its company APM Terminals North America had not offered adequate wage increases and had not agreed to calls for a halt to port automation projects. “We are prepared to fight as long as necessary and strike as long as necessary to get the wages and protections from automation that our ILA members deserve,” Daggett emphasized Tuesday.
He also stressed: “The USMX is now responsible for this strike. They must now meet our demands to end this strike.” The USMX previously said it had offered to increase wages by nearly 50 percent, consistent with an earlier proposal.
The industrial action, the ILA’s first since 1977, is causing concern for companies across the economy that rely on shipping to export or import their goods. Retailers, who account for about half of total container shipping volume, are in the process of implementing backup plans as they prepare for the crucial winter season. Retail giant Walmart and department store chain Costco said they were doing everything they could to mitigate the impact.
Will US President Biden intervene?
Representatives of US President Joe Biden’s administration met with USMX and ILA before the strike to reach an agreement. Presidential Office Chief of Staff Jeff Zients and top economic adviser Lael Brainard called for the dispute to be resolved fairly and quickly at a meeting on Monday, an official said.
However, the government has repeatedly ruled out using federal powers to end a strike in the event of failure. Under the Taft-Hartley Act of 1947, the US President has the right to stop certain strikes.
U.S. Chamber of Commerce President Suzanne Clark called on President Biden to reconsider his decision. It “would be unconscionable to allow a contract dispute to inflict such a shock on our economy.”