Potential Strike of Union Workers at U.S. Ports

(Reuters) – Some 45,000 union workers could walk off the job at seaports on the U.S. East and Gulf Coasts on Oct 1, cutting off vital trade arteries just weeks ahead of the nation's presidential election.

A strike would hit 36 ports handling about half of U.S. ocean imports, affecting the availability of various goods—from bananas to cars—while causing weeks-long backlogs. Additionally, it could inflate shipping costs for voters already dealing with housing and food inflation, according to logistics experts.

What’s the Issue?

The International Longshoremen's Association (ILA) union, representing workers from Maine to Texas, and the United States Maritime Alliance employer group appear to have reached an impasse over pay. The current six-year contract expires at midnight on Sept. 30.

A strike at all East Coast and Gulf of Mexico ports would be the first for the ILA since 1977.

The White House stated it is not attempting to mediate a deal, unlike prior negotiations last year for West Coast ports. A Biden administration official indicated that the President would not use federal powers to block a strike.

Autos, Machinery and Parts

Ports in the negotiating group managed $37.8 billion worth of vehicle imports in the 12 months ending June 30, 2024, according to S&P Global Market Intelligence. The Port of Baltimore, Maryland, is the nation's leader in car shipments.

Auto parts are significant imports on the East Coast and Gulf of Mexico, and rerouting shipments from Europe is more challenging than those from China, logistics experts mentioned.

Additionally, these ports lead the U.S. in shipments of machinery, fabricated steel, and precision instruments, valued at $97.4 billion, $16.2 billion, and $15.7 billion, respectively.

Agriculture and Pharmaceuticals

Three-quarters of the nation's banana imports from countries like Guatemala and Ecuador arrive at East and Gulf Coast ports, says Jason Miller, interim chair of Michigan State University's supply chain management department. A strike would also disrupt container exports of soybeans and have a significant effect on chilled or frozen meat and eggs, states Mike Steenhoek, executive director of the Soy Transportation Coalition.

The U.S. depends on imported coffee and cocoa and exports cotton. The $18-billion-a-year U.S. beef and pork export industry and the $5.8 billion poultry sector rely on refrigerated containers that cannot sit idle.

Approximately 45% of U.S. waterborne pork exports and 30% of beef exports were shipped through East Coast and Gulf Coast ports in the first seven months of 2023, according to U.S. Meat Export Federation spokesperson Joe Schuele.

More than one-quarter of all U.S. egg exports and about 70% of poultry meat exports are shipped from ports along the East and Gulf Coasts, as stated by Customs data and the USA Poultry & Egg Export Council.

Affected ports handle over 91% of containerized imports and 69% of containerized exports of U.S. pharmaceutical products, as noted by Everstream Analytics. More than one-third of containers leaving the U.S. with lifesaving medications depart from the Norfolk, Virginia port, while nearly one-third of containerized pharmaceutical imports enter through the Charleston, South Carolina port.

Consumer Goods and Energy

Retailers account for about half of all container volumes. U.S. retailers have already hurried shipments of year-end holiday goods. The ports impacted by a potential strike bring over half of the nation's knitted and non-knitted apparel, estimated at $32.8 billion, and furniture worth $23.4 billion, according to S&P Global Market Intelligence.

Though Houston and New Orleans ports are major oil and gas hubs, those commodities would likely remain unaffected by a labor-intensive container cargo strike. The same applies to coal exports from Norfolk, Virginia, experts say.

Higher Costs, Big Delays

In general, a strike would increase shipping costs and lead to extended delays. The top five ports in the negotiating group—New York and New Jersey, Savannah, Georgia, Houston, Norfolk, and Charleston—handled over 1.5 million 20-foot equivalent units (TEUs) valued at $83.7 billion in August, as stated by John McCown, senior fellow at the Center for Maritime Strategy. About two-thirds of that cargo was inbound, while the rest was outbound.

Trade disruptions from a work stoppage would begin immediately, causing rates to rise and impacting the U.S. economy, according to logistics experts. Analysts from Sea-Intelligence estimated it could take four to six days to clear the backlog resulting from a one-day strike. Maersk, one of the largest ocean transportation providers, cautioned that a one-week shutdown could necessitate six weeks for recovery, with backlogs and delays compounding daily.