Port Strike Begins at East and Gulf Coast Ports

The contract between the ports and about 45,000 members of the International Longshoremen’s Association (ILA) expired at midnight on Tuesday, October 1st.  Even though progress was reported in talks on Monday, the workers went on strike. Late Monday, the United States Maritime Alliance said it increased its wage boost offer to 50% and asked to extend the current contract so talks could continue without a work stoppage.  The ILA rejected that final proposal, saying it “fell far short” of what’s acceptable. In a statement, ILA President Harold Daggett said “we are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes.”

The strike affecting 36 ports is the first by the union since 1977.  Per Oxford Economics, “a strike would reduce U.S. economic activity by between $4.5 billion and $7.5 billion for every week it continues and it would take up to a month to clear the backlog of shipments that pile up while ports remain shut.” Although West Coast terminals could absorb some cargo diverted from eastern ports, they could not handle it all, nor could the U.S. rail system.  Should a strike persist longer than a month or so, some companies could face shortages of parts and other inputs. Much of the raw materials that go into a range of products flow through the East and Gulf Coast ports, such as cotton, wood and copper. The auto and pharmaceutical industries, which maintain lean inventories, could be affected, while port shutdowns in Miami and Norfolk could affect tobacco companies.  In addition, a strike could hamper shipments of products such as bananas, manufacturing components and plywood, interrupting the flow both of consumer goods and industrial parts for factories.  Fresh meat and other refrigerated food could spoil, resulting in shortages and increased prices.