Earlier on Tuesday local time, dockworkers on the East Coast and Gulf Coast of the United States went on strike, marking their first large-scale strike in nearly 50 years and disrupting about half of the country's shipping.
The strike has disrupted the transportation of food and cars from dozens of ports in Maine to Texas. Analysts warn that strikes will cause billions of dollars in economic losses every day, threaten local employment, and exacerbate inflation.
The International Longshore Workers' Association (ILA), representing tens of thousands of port workers, has been negotiating a new six-year contract with the American Maritime Federation (USMX), representing port employers on the East Coast and Gulf Coast, with a deadline of midnight on Monday, September 30th. The main differences between the two sides revolve around wage and automation disputes.
ILA announced in a statement on Tuesday that it had closed all ports from Maine to Texas early Tuesday morning Eastern Time and rejected the final proposal put forward by USMX on Monday. ILA stated that the proposal "falls far short of the requirements for its members to approve the new contract".
USMX stated in a statement on Monday that it has proposed to increase salary levels by nearly 50%, higher than previous proposals.
ILA Chairman Harold Daggett stated that employers such as container ship operator Maersk have not proposed appropriate salary increases or agreed to stop port automation projects.
We are prepared to continue fighting as long as necessary, and we will go on strike, no matter how long it takes, to get the wages our union members deserve and protection from the impact of automation, "said Daggett. USMX must meet our demands in order to end this strike
Significant economic impact
This is the first large-scale strike by ILA since 1977, causing concern for companies that rely on exporting goods by sea or ensuring critical imports. The strike has affected 36 ports, which handle a wide range of goods from bananas, clothing, cars, and more.
Rick Cotton, Executive Director of the Port Authority of New York and New Jersey, stated that there are nearly 100000 containers waiting to be unloaded at ports in the New York City area alone, and an additional 35 container ships will sail to New York in the coming week.
Steve Hughes, CEO of HCS International, a company specializing in automotive parts procurement and transportation, said that the union strike "has put the entire country in a difficult situation. I am really worried that the situation will be very bad
Morgan Stanley analysts estimate that the economic impact of this strike could reach up to $5 billion per day.
Biden is caught in a dilemma
This dispute has also put Biden, who claims to be the "most labor friendly president in American history," in a dilemma.
There are only a few weeks left until the US election day (November 5th).
Biden does not want to use tough measures to force workers to stop the strike, but if the strike continues, it may cause a huge blow to the US economy and threaten the Democratic Party's election prospects.
The Biden administration has repeatedly stated that it will not use federal power to prevent workers from striking in the event of a deadlock in labor negotiations. White House officials met with USMX management on Monday, urging them to resolve the deadlock fairly and quickly.
American Chamber of Commerce President Susanna Clark urged Biden to invoke the Taft Hartley Act on Monday, stating, "It is unreasonable to allow contract disputes to have such a significant impact on our economy
The Taft Hartley Act was a federal law enacted by the United States Congress in 1947 that restricted the activities and powers of unions. According to the bill, the President can intervene in labor disputes that threaten national security by establishing an 80 day cooling off period.
Sean O'Brien, the president of the United Truck Drivers Association, issued a statement in support of ILA on Monday night, stating, "The US government should stay away from this struggle, allow union workers to refuse labor, and fight for the wages and benefits they deserve
Retailers prepare in advance
As the crucial winter holiday sales season approaches, American retailers have been busy implementing backup plans. Many large retailers have pre ordered Halloween and Christmas goods to avoid any disruption caused by strikes.
Wal Mart, the US retail giant, and Costco, a membership based warehouse supermarket, said they were making every effort to mitigate any impact.
New York Governor Casey Hull stated that the state does not expect food suppliers or essential items to be immediately affected, but the impact may expand depending on the duration of the strike.
It is crucial for USMX and ILA to reach a fair agreement that respects workers and ensures commercial flow in ports as soon as possible, "she said on Tuesday.