US East Coast port strike looms as union, management trade wage offers By Reuters

By David Shepardson, Doyinsola Oladipo and Lisa Baertlein

(Reuters) -With U.S. East and Gulf Coast port workers set to strike in less than five hours, a port operator alliance said on Monday it traded new wage offers with the union, raising the outside possibility of a settlement before a halt to container traffic from Maine to Texas.

The labor contract between the International Longshoremen’s Association (ILA) union representing 45,000 port workers and the United States Maritime Alliance (USMX) employer group expires late on Monday, with negotiations at an impasse over pay.

The USMX said in a statement on Monday it had offered to hike wages by nearly 50% and traded new proposals with the union in the last 24 hours and asked for an extension of the current master contract.

“We are hopeful that this could allow us to fully resume collective bargaining around the other outstanding issues – in an effort to reach an agreement,” USMX said.

A strike would cost the U.S. economy roughly $5 billion a day, JP Morgan analysts estimated, as shipments of food, retail goods and other products are disrupted from busy terminals including New York, Baltimore and Houston.

The port strike will go ahead starting at 12:01 a.m. ET on Tuesday, the ILA said on Sunday. The union did not immediately respond to a request for comment.

A source briefed on the matter said USMX made the new offer earlier, to which ILA responded in a statement calling it “an unacceptable wage package that we reject.”

If union members do walk off the job, it would be the first coast-wide ILA strike since 1977, affecting ports that handle about half of the nation’s ocean shipping.

Marine terminals were closing at 5 p.m. ET (2100 GMT) and nearly 100,000 containers will remain stored at the port until the strike is ended, said Rick Cotton, who heads the Port Authority of New York and New Jersey, on Monday. Another 35 ships are expected to arrive at the port over the next week and they will remain at anchor during the strike.

U.S. Chamber of Commerce President Suzanne Clark urged President Joe Biden to use his authority to prevent a walkout for 80 days saying it “would be unconscionable to allow a contract dispute to inflict such a shock to our economy.” Biden said on Sunday he did not plan to intervene.

The White House reiterated on Monday it was not considering using the federal Taft-Hartley Act to halt a strike, which would force workers to go back on the job while negotiations continue.

White House Chief of Staff Jeff Zients and top economic adviser Lael Brainard held a meeting with USMX board members on Monday urging them to resolve the dispute fairly and quickly, a White House official said.

The union has previously said the strike would not impact military cargo shipments or cruise ship traffic.

A strike could stop the flow of everything from food to automobiles at major ports, potentially jeopardizing jobs and stoking inflation weeks ahead of the U.S. presidential election.

New York Governor Kathy Hochul said the strike could impact things like automobile imports but the state expects no immediate impact on food suppliers or essential goods.     

“We’re deeply concerned about the impact a strike could have on our supply chains, especially when it comes to critical goods like medical supplies and others,” Hochul said.

National Association of Manufacturers CEO Jay Timmons said a strike would throw manufacturing supply chains throughout the U.S. into disarray. “Billions of dollars of goods – from food to vehicles to electronics – rely on access to the East and Gulf Coast ports,” Timmons said.

A short strike could have a limited economic impact given many companies have imported extra goods ahead of a possible work stoppage or shifted more shipments to West Coast ports. But a strike that continues for weeks could have serious economic impacts.

“These people today don’t know what a strike is,” Harold Daggett, the ILA’s fiery leader, said in a recent video post. “I’ll cripple you. I will cripple you.”

For months, Daggett has threatened to shut down the 36 ports covered by his union if employers like container ship operator Maersk and its APM Terminals North America do not deliver significant wage increases and stop terminal automation projects.

The dispute is worrying businesses that rely on ocean shipping to export their wares, or secure crucial imports.

Steve Hughes, CEO of HCS International, which specializes in automotive sourcing and shipping, accused the ILA of “holding the entire country over a barrel.” 

HIGH STAKES

An ILA strike could wedge labor-friendly U.S. President Joe Biden into a no-win position as Vice President Kamala Harris runs a razor-tight election race against former President Donald Trump.

On Friday, Biden administration officials met with the USMX employer group to directly convey “that they need to be at the table and negotiating in good faith fairly and quickly” – a message it had delivered earlier to the ILA.

The USMX has accused the ILA of refusing to negotiate.

Retailers account for about half of all container shipping volume. Many big retailers rushed in Halloween and Christmas merchandise early to avoid any strike-related disruptions.

Walmart (NYSE:), the largest U.S. container shipper, and membership warehouse club operator Costco (NASDAQ:) say they are doing everything they can to mitigate any impact.  

But a lot of shippers do not have that flexibility. Onx Homes CEO Ash Bhardwaj has factories in Florida and imports materials used to build homes in the company’s planned communities through the Port of Miami.

Like other shippers in his position, he was resigned to his fate. “Everyone will have the same problem,” Bhardwaj said.