What’s happening
On October 1, 2024, members of the International Longshoremen's Association (ILA) went on strike for the first time since 1977. The 50,000 longshoremen going on strike brought ports from Maine to Texas to a standstill. It goes without saying but longshoremen are essential workers at ports. They’re responsible for operating cranes, securing containers, and managing the necessary paperwork that enables efficient cargo movement. So if they’re not working then no product is moving into or out of the United States along the east coast.
Why is the strike happening now?
The previous master contract which outlines wages, benefits, work rules etc.. for the longshoreman expired on September 30, 2024. So naturally the ILA, which is the labor union representing these workers, would want to renegotiate better terms with the United States Maritime Alliance (USMX) which is an alliance of container carriers, direct employers, and port associations serving the East and Gulf Coasts of the US. As you probably guessed the USMX and ILA have a long-standing relationship as the two parties responsible for negotiating labor contracts for port operations.
The ILA has a couple main asks:
- Wage increases: The ILA is advocating for a substantial 77% wage increase. This demand stems from rising living costs and aims to ensure that longshoremen receive fair compensation for their critical work.
- Ban on automation: The union wants to stop automation at ports, which they believe could jeopardize their jobs.
Why should you care?
The impact of this strike will largely depend on its duration, obviously. Here’s what you should consider:
- Cargo congestion: For every day of the strike, it could take an additional 7 to 10 days to clear out cargo backlog, leading to shortages of everyday items like produce and pharmaceuticals.
- Increased costs: Higher shipping costs resulting from delays may ultimately be passed on to consumers through higher prices at retail stores.
- General economic impact: The strike is projected to cost the U.S. economy between $4.5 billion to $7.5 billion per week. This translates to a 0.1% reduction in the annualized U.S. gross domestic product (GDP) for each week of the strike.
Government Intervention
While President Biden has the authority to intervene using the Taft-Hartley Act - potentially suspending the strike for up to 80 days - he has stated that he currently has no plans to do so. However, this could change if the situation escalates or if economic impacts worsen significantly.
Perspective on automation
The ILA has expressed concerns about automation potentially threatening jobs which is valid. When implemented thoughtfully, automation can actually enhance the work of longshoremen and improve overall port operations. Generally speaking, rather than being viewed as something that is going to take away jobs our perspective on automation is that it should be used to complement the skillset of workers and improve the quality and efficiency of their day to day operations.
Parting thoughts
The longshoreman are the lifeblood of the coast and are essential to the United States supply chain and our economy. Automation is here to stay and we have to find a way forward where it is in the best interest of all parties. It’s too early to predict the full impact of this strike - a short strike may not cause significant problems, but a prolonged one could affect consumer prices and availability of goods in stores across the country.
