U.S. dockworkers’ strike could push up prices and cause shortages if it lasts for weeks

From Maine to Texas, dockworkers at 36 ports across the eastern United States are on strike for the first time in decades, a work stoppage that could snarl supply chains and cause shortages and higher prices if it stretches on for more than a few weeks.

Workers began walking picket lines early Tuesday in a strike over wages and the ports’ use of automation, though some progress was reported in negotiations over a new contract. The existing contract between the ports and about 45,000 members of the International Longshoremen’s Association expired at midnight.

The strike, coming weeks before a tight presidential election, could become a factor in the race if shortages begin to affect many voters. Pressure could eventually grow for the Biden administration to help facilitate a settlement, though the administration has said it doesn’t plan to intervene beyond encouraging both sides to reach an agreement.

In early picketing, workers outside the Port of Philadelphia walked in a circle and chanted, “No work without a fair contract.” The union, which is striking for the first time since 1977, posted message boards on the side of a truck reading: “Automation Hurts Families: ILA Stands For Job Protection.”

Boise Butler, president of the union local, asserted that the workers want a fair contract that doesn’t allow for the automation of their jobs. The shipping companies, he argued, made billions during the pandemic by charging high prices.

“Now,” Butler said, “we want them to pay back. They’re going to pay back.”

He warned that the union plans to strike for as long as it needs to achieve a fair deal and has valuable leverage over the companies.

“This is not something that you start and you stop,” Butler said. “We’re not weak,” he added, pointing to the union’s vital importance to the nation’s economy.

At Port Houston, at least 50 workers started picketing around midnight local time carrying signs saying, “No Work Without a Fair Contract.”

The U.S. Maritime Alliance, which represents the ports, said Monday evening that both sides had given some ground on their previous wage demands. But no deal was reached.

Labor experts suggest that the striking workers may wield the upper hand in the standoff. The union’s most recent contract with the alliance was negotiated before the COVID-19 pandemic. Factors ranging from the effects of inflation to increased workloads from pandemic-era demands to a more generous contract achieved by the dockworkers’ West Coast counterparts have boosted their standing to demand higher pay, better workplace protections and a slowdown in the automation of work functions.

“This is a very opportune time,” said William Brucher, an assistant professor of labor studies and employment relations at Rutgers University.

Though inflation has diminished, Brucher noted, the cost of living is still much higher than it was before COVID-19, which means the buying power of workers’ wages has shrunk.

Brucher also pointed to momentum from other labor activity over recent years, with unions across several industries demanding more concessions and some companies yielding to them. The contract agreement made last year with West Coast dockworkers, who are represented by a different union, shows that “higher wages are definitely possible” for the longshoremen and has enhanced their bargaining power.

Leading up to the strike, the union’s opening offer in the talks was for a 77 per cent pay raise over the six-year life of the contract, with President Harold Daggett saying it’s necessary to make up for inflation and years of small raises. The union members earn a base salary of about US$81,000 per year, but some can pull in over US$200,000 annually with significant amounts of overtime.

On Monday evening, the alliance said it had increased its offer to 50 per cent raises over six years and pledged to keep limits on automation that are in place from the old contract. The alliance also said its offer tripled employer contributions to retirement plans and strengthened health care options.

On Tuesday, Daggett told CNBC that the union is now pushing for a 61.5 per cent pay increase over six years. A message was left seeking comment from the union on the new wage offer.

Still, the union is demanding a complete ban on automation. How far apart the two sides are on that issue remains unclear.

In a statement early Tuesday, the union said it rejected the alliance’s latest proposal because it “fell far short of what ILA rank-and-file members are demanding in wages and protections against automation.” The two sides had not held formal negotiations since June.

Consumers won’t likely feel any consequences from the strike right away, supply chain experts say. In anticipation of a strike, most major retailers have stocked up on goods, moving ahead shipments of holiday gift items. But if the work stoppage drags out for more than a few weeks, consumers could feel the effects.

If drawn out, the strike could cause some goods to arrive late for peak holiday shopping season, potentially disrupting the delivery of anything from toys and artificial Christmas trees to cars, coffee and fruit. The strike will likely have an almost immediate impact on supplies of perishable imports like bananas. The ports that are affected by the strike handle 3.8 million metric tons of bananas each year, or 75 per cent of the nation’s supply, according to the American Farm Bureau Federation.

Though consumers might face higher prices for some of these items over time, businesses will likely take hits sooner. In addition to paying for delays, competition to keep prices down or relatively stable may lead some affected companies to incur extra costs.

Jay Foreman, CEO of Basic Fun, which makes such toys as Care Bears and Lincoln Logs, said he has been monitoring the port situation for months and planned for it by shifting all container shipments to West Coast ports. But he said the shift added anywhere from 10 per cent to 20 per cent extra costs that his company will have to absorb.

Foreman added that Basic Fun’s prices for the next 10 months are locked in with retailers but that he might have to raise prices during the second half of 2025 if the strike is prolonged.

“We were expecting a good holiday season, but now those extra costs are going to eat into profits,” he said. “It affects raises and bonuses.”

The strike could also snarl exports from East Coast ports and create traffic jams at ports on the West Coast. Railroads say they can ramp up to carry more freight from the West Coast, but analysts say they can’t move enough to make up for the closed Eastern ports.

J.P. Morgan estimated that a strike that shuts down East and Gulf coast ports could cost the economy $3.8 billion to $4.5 billion per day, with some of that recovered over time after normal operations resume.

Retailers, auto parts suppliers and produce importers had hoped for a settlement or that President Joe Biden would intervene and end the strike using the Taft-Hartley Act, which allows him to seek an 80-day cooling off period.

But during a Sunday exchange with reporters, Biden, who has worked to court union votes for Democrats, said “no” when asked if he planned to intervene in the potential work stoppage.

In an update Tuesday morning, the White House maintained that administration officials were working “around the clock” to help negotiations move forward. Biden and Vice President Kamala Harris were also “closely monitoring” potential supply chain impacts, the White House added, enlisting a task force to meet daily and prepare for any disruptions.

Biden’s keeping his word on not intervening carries a lot of weight for the coming election, experts say.

“Democrats really can’t afford to alienate organized labor,” Brucher said.

Taft-Harley injunctions by a president are “widely despised” by unions across the country, he said, and those same unions are necessary for turnout at the polls, particularly for Harris’ campaign.

Krisher reported from Detroit, Grantham-Philips from New York. Associated Press journalists Ben Finley in Norfolk, Virginia, Anne D’Innocenzio and Mae Anderson in New York, Dee-Ann Durbin in Detroit, Josh Boak in Washington, and Annie Mulligan in Houston contributed to this report.