Striking Philadelphia longshoremen are shown picketing outside the Packer Avenue Marine Terminal Port on Tuesday, Oct. 1, 2024.

Ryan Collerd/AP

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Ryan Collerd/AP

BALTIMORE – Unionized longshoremen along ports on the East and Gulf Coasts began picketing early Tuesday, stopping the movement of billions of dollars’ worth of goods, including furniture, paper, shoes, manufacturing components, farm equipment and more.

The picketing began shortly after midnight after talks between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX), which represents shipping companies and port operators, failed to produce a new contract.

“USMX launched this strike when it decided to hold on to foreign ocean carriers that generate billions of dollars in profits at United States ports, but not to compensate the ILA American longshoremen who do the work that makes them their wealth “ILA President Harold Daggett said in a statement released early Tuesday.

The two sides have not met in person since June. They seem to be far apart on key issues. The alliance requested an extension on Monday, a request that was not responded to by the union.

Despite pressure from House Republicans and more than 170 industry groups warning that a strike would have devastating effects on the economy, the Biden administration remains steadfast in its decision to allow the collective bargaining process to proceed.

“I don’t believe in Taft-Hartley,” President Biden told reporters on Sunday, referring to the federal law that allows the president to request an 80-day cooling-off period if the nation’s security is at risk.

Billions of dollars worth of goods are in limbo

The extent of the economic impact of the strike depends on how long it lasts.

According to the US Maritime Alliance, the strike is affecting work at 14 ports on the East and Gulf Coasts. These are the ports of Boston, New York/New Jersey, Philadelphia, Baltimore, Norfolk, Wilmington, Charleston, Savannah, Jacksonville, Miami, Tampa, Mobile, New Orleans and Houston.

More than $2 billion worth of goods typically flow through these ports every day, from cars and clothing to bourbon and bananas.

That includes more than half of all freight containers coming into the U.S., or about a million containers per month. This also includes more than three-quarters of exported containers – about 327,000 per month, according to freight tracking company Vizion.

These volumes fell sharply in recent days leading up to the strike.

“If this goes on for weeks, it’s going to be a massive headache,” said Vizion CEO Kyle Henderson. “If it’s just days, it’s probably just a blip.”

Trade groups warned in a letter to President Biden that an extended strike would have devastating consequences for the U.S. economy.

“It is imperative that parties return to the table without engaging in disruptive activities that could harm the economy and the millions of businesses, workers and consumers who rely on the smooth flow of goods, both imports and exports, through our East Coast and the Gulf are dependent on coastal ports,” the groups’ letter said.

The Distilled Spirits Council of the United States notes that more than three-quarters of imported spirits typically flow through affected ports, along with more than 40% of American spirits sold abroad. Stopping these deliveries could be particularly costly in the run-up to the Christmas shopping season.

“Consumers love buying their favorite bottle of American whiskey, Scotch, Irish whiskey or cognac as Christmas gifts,” said Chris Swonger, chief executive of the council. “Even a one-day strike could have an impact on the entire route.”

Companies are looking for alternative routes

Companies have drawn up contingency plans to partially mitigate the economic impact.

Ryan Petersen, CEO of Flexport, a trucking company, said customers were already rerouting freight to the West Coast in anticipation of the work stoppage.

“It became clear at the beginning of the year that this would be a big problem,” says Petersen.

In recent days, he says, Flexport has focused on moving cargo to avoid paying high fees for containers left behind at East and Gulf Coast ports, and increasing operations at West Coast ports in anticipation of a surge in activity strengthen.

Goods already on ships heading to strike-affected ports will simply have to sit offshore until the strike is over, Petersen says.

“The reality is there’s only so much you can do,” says Jeff Sloan of the American Chemistry Council, whose members rely heavily on ports along the Gulf Coast and in New Jersey and New York. “For high-volume materials like plastic resins, there is simply no way to redirect them to other ports or ship them in any other way.”

Far apart when it comes to wages

Two big sticking points are wages and automation.

In a statement Monday, the U.S. Maritime Alliance said the two sides exchanged counteroffers on wages in the past 24 hours.

Allianz said its latest offer would increase wages by almost 50% and triple employee pension contributions.

The International Longshoremen’s Association had rejected previous offers, calling them “stingy” given the shipping industry’s huge profits in recent years.

“Even a wage increase of $5.00 per hour for each year of a six-year contract represents only an average annual increase of approximately 9.98 percent,” union President Daggett said in a statement last week.

Wage increases under the last contract, signed in 2018, were far more modest. In four of the six years, they increased by only $1 per hour, making the top hourly wage $39.

Jobs at the ports have traditionally been among the highest-paying blue-collar jobs in the country, often costing more than $100,000 a year. But Daggett says port operators should pay workers more.

“They made most of their money during the Corona period when my men had to go to work on these piers every day,” he says in a video posted by the union. “They died out there with the virus. We are all sick with the virus. We kept them going.”

Fear of replacing people with machines

On the topic of automation, Daggett warns longshoremen that the foreign companies that operate the ports are trying to replace them with machines.

The US Maritime Alliance said it has offered to maintain the current ban on fully automatic equipment and maintain the requirement that any use of semi-automatic equipment be negotiated.

Early Tuesday, Daggett responded in a statement that the alliance’s latest offer “fell far short of the demands of rank-and-file ILA members on wages and protections from automation.”

Ports around the world and even on the West Coast are already using advanced technology to transport shipping containers.

It is not entirely clear how many jobs will be lost due to the transition to automated terminals. The shipping industry, backed by UC Berkeley researchers, argues that automation helps ports remain competitive and handle more goods, which in turn creates demand for highly skilled workers.

Difficult situation for the White House

The Biden administration says it has encouraged all parties to continue negotiating and to do so in good faith.

On Friday, Transportation Secretary Pete Buttigieg and acting Labor Secretary Julie Su met with shipping company representatives. According to the White House, they were also in “contact” with the longshoremen’s union last week.

It is clear that the union was not happy with Biden.

“Where is the President of the United States?” He’s not fighting for us,” Daggett said in the union video released in September.

The sharp rebuke came nearly four years after Daggett endorsed Biden in the 2020 election. He cited his friendship and support while criticizing former President Trump for packing courts with anti-union judges and supporting so-called “right-to-work” laws aimed at weakening unions.

In July, shortly after the first assassination attempt on Trump, Daggett posted a photo of himself with Trump, said prayers on behalf of union members and recalled “a wonderful, productive 90-minute meeting” with Trump at Mar-a-Lago in November 2023.

“I expressed to President Trump the threat posed by automation to the American workforce,” he wrote. “President Trump promised to support the ILA in its opposition to automated terminals in the US. Mr. Trump also listened to my concerns about federal “right to work.” Laws.”

While Biden and Vice President Harris enjoy the support of most union leaders, the same cannot be said of many rank-and-file union members.

In 2022, freight railroad workers were deeply angry at Biden for signing a measure that imposed a labor contract on them and blocked a nationwide rail strike.

With longshoremen on strike and the presidential election five weeks away, the government probably doesn’t want to risk a major backlash from unions.