A free version of the Editor’s Digest has been made available. Roula Khalaf, Editor of the Financial Times, curates her preferred stories in this weekly newsletter.
US business groups have raised alarms about potential economic “paralysis” just five weeks before the presidential election, following a strike by tens of thousands of dockworkers on Tuesday. This strike has resulted in the closure of ports along the eastern and Gulf coasts.
Dockworkers, represented by the International Longshoremen’s Association (ILA), initiated the strike at major US ports for the first time in nearly five decades after their employment contract expired at midnight. The United States Maritime Alliance (USMX), representing the employers, disclosed that negotiations for a new contract covering approximately 25,000 ILA workers have been stalled for months due to disputes over pay and automation.
ILA President Harold Daggett, addressing picketing members in New Jersey on Tuesday, stated, “We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve.”
The affected ports, numbering around three dozen and stretching from Maine to Texas, manage one-quarter of the nation’s international trade, valued at $3 trillion annually, according to The Conference Board.
On Monday, the business group warned that the strike would “paralyze US trade”, halting imports of essential goods including food, pharmaceuticals, consumer electronics, and clothing. However, the union announced its intention to continue handling military cargo.
This closure represents another challenge to global supply chains, already strained by a drought affecting Panama Canal traffic and attacks by Houthi militants in Yemen that have disrupted Red Sea shipping.
JPMorgan analysts have estimated that the strike could cost the US economy up to $4.5 billion daily, although they do not expect it to extend beyond a week.
Moody’s Analytics economist Adam Kamins commented, “A disruption of a week or two will create some backlogs, but the broader consequences will be minimal outside of a handful of very port-reliant areas, including Savannah, Georgia. However, a prolonged strike will lead to shortages and upward price pressures, particularly for food and automobiles, which are heavily dependent on the affected ports.”
The White House reported that President Joe Biden is “closely monitoring” the strike and has been informed that its impact on consumers is expected to be “limited at this time, including in the critical areas of fuel, food, and medicine.”
President Biden has pressured employers’ representatives to make concessions, stating that he urged the USMX to present a “fair offer” to port workers reflecting “the substantial contribution they’ve been making to our economic comeback.”
Julie Su, the Acting US Secretary of Labor, added, “As these companies make billions and their CEOs receive millions in compensation each year, they have refused to put an offer on the table that acknowledges workers’ sacrifice and contributions to their employer’s profits.”
USMX responded, stating its offer of a nearly 50 percent wage increase “exceeds every other recent union settlement, while addressing inflation, and recognizing the ILA’s hard work to keep the global economy running.”
On Tuesday, the union demanded a $5 per hour pay increase and “absolute airtight language that there will be no automation or semi-automation”. Previously, ILA members earned between $20 and $39 per hour under the old contract.
President Biden has declined to invoke a 1947 federal law that would permit him to terminate the strike, rejecting calls from business leaders for intervention.
Suzanne Clark, CEO of the US Chamber of Commerce, stated hours before the strike began, “Americans experienced the pain of delays and shortages of goods during the pandemic-era supply chain backlogs in 2021. It would be unconscionable to allow a contract dispute to inflict such a shock to our economy.”
