A New Strike Threat: Oct 2024
The last significant strike by the International Longshoremen's Association (ILA) on the U.S. East Coast occurred in 1977. Since then, all labor disputes have been resolved through negotiations, avoiding further strikes.
However, a new strike threat is looming as the ILA and the U.S. Maritime Alliance (USMX) face stalled negotiations over wages, automation, and working conditions.
The potential strike in October 2024 could severely impact 36 major ports along the East and Gulf Coasts, with the shipping industry estimating that each week of a stoppage could lead to about a month of delays. This disruption could affect global supply chains, retailers, and consumers.
From a government perspective, the Biden administration has so far refrained from direct intervention, emphasizing support for collective bargaining. However, the government should get involved if negotiations fail, especially given the timing close to the presidential election, which adds political pressure to resolve the issue
The Taft-Hartley Act (officially the Labor Management Relations Act of 1947) is a federal law that provides the U.S. government with tools to intervene in labor disputes that threaten national health or safety. Specifically, under Section 208, the President can invoke an 80-day "cooling-off" period if a strike is deemed to pose a national emergency. During this period, striking workers are required to return to work while negotiations continue. The law was designed to balance workers' rights with the broader economic impact of labor disputes.
In the context of a potential ILA strike, our view is that the President should definitely invoke the Taft-Hartley Act because the work stoppage at major ports will significantly disrupt trade and the economy. This measure was last used in 2002 during a West Coast port lockout, where the Bush administration secured a court injunction to reopen ports under the action.
Question and Answer
Here is a quick Question and Answer that hopefully will provide some more context to this situation.
Q. What are the major issues?
A. The International Longshoremen's Association (ILA) is pushing for several key demands in their ongoing negotiations with the U.S. Maritime Alliance (USMX), making the dispute particularly contentious.
Wage Increases: The ILA is seeking a substantial wage hike “reportedly” nearly 80% over six years. This request is driven by rising inflation and the perceived need to reward workers for maintaining supply chains during the pandemic. The wage increase demand is significantly higher than the 32% increase recently secured by West Coast dockworkers, fueling tension between the two sides.
There are two other issue areas - Opposition to Automation and Equitable Pay Across Ports. But, obviously, the increase of salaries is THE major issue, in JMC’s view.
Q. What ports will be affected if there is an ILA strike?
A. 36 major ports along the East Coast and Gulf Coast of the United States. These include some of the busiest ports in the country, such as:
Port of New York and New Jersey
Port of Savannah
Port of Charleston
Port of Norfolk (Virginia)
Port of Miami
Port of Baltimore
Port of Houston
Port of New Orleans
Port of Jacksonville
Q. What is the size of the problem?
A. Collectively, these ports process around 11 million containers annually. For example, New York/New Jersey handles over 7.5 million TEUs, Savannah handles over 5 million TEUs, and Houston manages around 4 million TEUs
Q. Can we solve the problem by diverting our containers to Canada, Mexico, or the West Coast?
A. The short answer is we might have a 5% to 10% ability to convert goods short term. But there are significant drawbacks to any of the above options and the price increases will be very large. Further, the longer-term results of trying to go outside of the normal supply chain options are limited and, in most cases, fraught with their own risk.
More to follow.