Some importers started ordering Christmas goods four months earlier than usual to get them through the ports before a labor contract between the operators of port terminals and the International Longshoremen’s Association expires next Monday.
Many shipments have been diverted to West Coast ports, where dockworkers belong to a different union that agreed a new contract last year. The ports of Long Beach and Los Angeles say they are handling at least as many containers as they did during the pandemic shipping boom of 2021-22.
Despite those measures — and all the problem-solving skills that supply chain managers developed during the turbulence of recent years — a short strike could lead to significant disruptions. JPMorgan transportation analysts estimate that a strike could cost the economy $5 billion a day, or about 6% of gross domestic product, expressed daily. For each day the ports are shut down, the analysts said, it would take roughly six days to clear the backlog.
Chris Butler, CEO of the National Tree Co., which sells artificial Christmas trees and other decorations, said his company had brought in goods early and made greater use of West Coast ports. But he estimated that 15% of his goods would still be stranded by a port strike.
“I’m very unhappy,” said Butler, who is based in northern New Jersey. “We’re doing everything we can to mitigate it. But there’s only so much you can do when you’re at the mercy of these ports.” Just over half of imported apparel, footwear and accessories come through East Coast ports, according to Stephen Lamar, the president of the American Apparel and Footwear Association. While his industry has made significant preparations for a strike, he said, “with logistics we should never be surprised when last-minute hurdles come along.” Last week, scores of trade groups sent a letter to the Biden administration, imploring it to help forge a deal between the ILA and the United States Maritime Alliance, a group of companies that move cargo at ports.
The alliance said Monday that it had been unable to schedule a meeting with the ILA, adding that it had been contacted by the Federal Mediation and Conciliation Service, a government agency that helps management and unions negotiate labor contracts.
In its own statement Monday, the union disputed the idea that it was refusing to negotiate and said the alliance was offering wage increases that were unacceptably low.
There hasn’t been a strike across all the East and Gulf coast ports since 1977, when a walkout slammed some retailers before the holidays.
Administration officials have said President Joe Biden is not planning to force dockworkers back to work, which the 1947 Taft-Hartley Act authorizes him to do. Beth Rooney, director of the Port of New York and New Jersey, said last week that invoking the act would be “our best scenario next to there being a settlement.”
A strike would close huge container ports in New Jersey, Virginia, Georgia and Texas. It would include the Port of Baltimore, a big hub for the import and export of vehicles and heavy machinery that fully reopened in June after a container ship crashed into the Francis Scott Key Bridge in March. Significant food trade goes through the East and Gulf coast ports, including a major share of orange juice imports through a facility in Newark, New Jersey. Facilities for cruise ships are likely to keep operating, officials said.
The ILA, which has more than 47,000 members, and the Maritime Alliance have not met in person since June, when the union broke off talks over what it claimed was unauthorized use of labor-saving technology at a port in Mobile, Alabama. And it wants to increase wages, which have been significantly eroded by the high inflation of the past few years.
East and Gulf coast longshoremen with six or more years’ experience currently earn $39 per hour, up 11% since the start of their expiring six-year contract. Over the same period, inflation was 24%.
Neither the union nor management is making its wage proposal public, but The Journal of Commerce, a publication that focuses on trade, reported recently that the ILA sought a $5-per-hour increase for each year of the contract’s six-year term, while management has proposed a $2.50-per-hour annual raise.
“My ILA members are not going to accept these insulting offers that are a joke considering the work my ILA longshore workers perform, and the billion-dollar profits the companies make off the backs of their labor,” Harold J. Daggett, the union’s president, said in a statement Monday.
The ILA declined to answer emailed questions. The alliance also declined to comment.
A vast majority of goods going in and out of the United States pass through marine ports, giving the two main dockworkers’ unions significant leverage, which they have used over the years to secure raises and, at some ports, lucrative pensions and other benefits.
West Coast longshore workers on average earned nearly $220,000 last year, according to management, and currently make nearly $55 an hour. At the Port of New York and New Jersey, nearly 60% of the longshoremen made $100,000 to $200,000 in the 12 months through June 2020, the latest figures available, according to data from an agency that helped oversee the port.
Some three-fifths of container shipments to the United States come through the East and Gulf coasts, and logistics experts say there is no way that the West Coast ports could absorb all or even most of them if they were diverted.
Industry analysts also said there was still spare truck and rail capacity to move containers out of the West Coast ports and send them across the country.
But doing so can be prohibitively expensive. It can cost as much as $6,000 to ship a container of artificial Christmas trees from the West to the East Coast, Butler of the National Tree Co. said. “It’s way too much,” he added, and while shipping by rail is a little cheaper, delivery times can be less certain, a risk he said he was unwilling to bear.
