Dock worker strike shuts down ports in the East, threatening big hit to the U.S. economy

The union representing thousands of dock workers from Maine to Texas launched a strike Tuesday over wages and the use of automation, shutting down seaports with a work stoppage that threatens to cause significant disruption to trade and the national economy.
It was the first strike since 1977 for the International Longshoremen’s Assn., whose 47,000 members handle cargo operations at three dozen ports on the East and Gulf coasts that receive about half of U.S. imports . And it comes at a delicate time, economically and politically, as the country is emerging from a period of high inflation and is just a month ahead of national elections.
If the strike ends quickly, it isn’t expected to have big impacts on businesses or consumers. Many retailers had their products shipped earlier than usual and built up inventory in anticipation of a labor action. Some importers have transported goods by air and others have rerouted cargo to the West Coast, adding to increased traffic at the ports of Los Angeles and Long Beach, the busiest container complex in the U.S.
But with each passing day, economists say it will cost billions of dollars in lost trade, although some of that would be recouped later. And if the ports remain shut down for longer than a week or two, more significant and wider effects will hit the American economy.
Initially the impact may be relatively minor and even unnoticeable to most consumers, with products like European wine and perishables like bananas costing more, said Jason Miller, a supply chain management expert at Michigan State University. But after a couple of weeks, he said, automakers that produce cars in the U.S. could be forced to slow production or even impose temporary layoffs if they can’t get enough imported parts and components.
“There’s just a limit to what the system can take. You can only divert so much,” said Miller.
The Biden administration has said that it is not considering invoking the 1947 Taft-Hartley Act to break a strike, but analysts say it may have little choice if it is not settled soon, given the potential economic and political damage it could cause.
The ports of Los Angeles and Long Beach combined had their busiest August ever this year, and both ports have prepared for increased cargo volume in anticipation of the strike. West Coast dock workers are represented by a different union, which agreed to a new contract last year.
“Port operators on the West Coast learned to operate under severe duress during the reopening of trade following pandemic-era distortions,” said Joseph Brusuelas, chief economist at the tax and consulting firm RSM US. “We think that this will partially mitigate some of those that will adversely impact trade volumes during the duration of the labor action.”
Brusuelas estimated the strike would affect about $1.3 billion in exports and $3 billion in imports daily, still a modest figure given the size of the American economy. “The major industries impacted by this action will be local transportation and warehousing and imports of autos,” he said. “Agricultural goods, coal, and petroleum figure to see the greatest short-term impact.”
The impact figures to be heaviest in places that are home to or support the biggest ports along the Atlantic and Gulf coasts, including New York-New Jersey; Savannah, Ga.; Houston; and Charleston, S.C. But businesses in California say they expect it will also touch them and consumers on the West Coast.
“If we have learned anything at all from previous supply chain disruptions, it is that the fallout results in higher cost for consumers on goods like clothing, fruits and vegetables and medical supplies,” said Patty Tschaepe, president of the Los Angeles Customs Brokers and Freight Forwarders Assn.
Longshoremen started picketing after their six-year labor contract with the United States Maritime Alliance expired at midnight.
The alliance, which represents shipping lines and terminal operators at the ports, said late Monday that the two sides had traded offers in what appeared to be a last-ditch effort to avert a strike. The union has been pressing for wage increases of 77% over six years, according to published reports. The maritime alliance said Monday that it had offered nearly 50%.
Top-scale longshoremen earn a base pay of $39 an hour. The union also has pushed hard against employers wanting to use robotics and other labor-saving technologies. The alliance said Monday that it had offered to maintain the current language on automation and semi-automation.
The union, in its latest posted statement Monday, said the ocean carriers, mostly foreign-owned, had made billions of dollars of profits on the back of union workers whose wages have been eaten away by inflation.
Neither side had an immediate comment Tuesday.