Approximately 45,000 dockworkers at ports along the East and Gulf coasts are resuming work after their union struck a deal with port operators to suspend the industry’s biggest work stoppage in nearly half a century that could have led to shortages and higher prices.
East and Gulf Coast ports began reopening late on Thursday, but clearing the cargo backlog will take time.
The International Longshoremen’s Association is suspending its three-day strike until Jan. 15 to provide time to negotiate a new contract. The union and the U.S. Maritime Alliance, which represents ports and shipping companies, said in a joint statement that they have reached a tentative agreement on wages.
A person briefed on the agreement said the ports sweetened their wage offer from about 50% over six years to 62%. The person didn’t want to be identified because the agreement is tentative. Any wage increase would have to be approved by union members as part of the ratification of a final contract.
Talks now turn to the automation of ports, which the unions says will lead to fewer jobs, and other sticking points.
Industry analysts have said that for every day of a port strike it takes four to six days to recover. But they said a short strike of a few days probably wouldn’t gum up the supply chain too badly.
At least 54 container ships queued outside the ports as the strike had prevented unloading and threatened shortages of anything from bananas to auto parts. More ships are sure to arrive.
Pricing platform Xeneta said it was likely to take two to three weeks for the normal flow of goods to be re-established.
“Remember that ships keep calling, so it’s not just a matter of handling the ships already in line, but to work extra hard to run down the congestion before supply chains are re-running,” Xeneta Chief Analyst Peter Sand told Reuters.
The settlement pushes the strike and any potential shortages past the November presidential election, eliminating a potential liability for Vice President Kamala Harris, the Democratic nominee. It’s also a big plus for the Biden-Harris administration, which has billed itself as the most union-friendly in American history. Shortages could have driven up prices and reignited inflation.
The union went on strike early Tuesday after its contract expired in a dispute over pay and the automation of tasks at 36 ports stretching from Maine to Texas. The strike came at the peak of the holiday season at the ports, which handle about half the cargo from ships coming into and out of the United States.
Most retailers had stocked up or shipped items early in anticipation of the strike.
“With the grace of God, and the goodwill of neighbors, it’s gonna hold,” President Joe Biden told reporters Thursday night after the agreement.
In a statement later, Biden applauded both sides “for acting patriotically to reopen our ports and ensure the availability of critical supplies for Hurricane Helene recovery and rebuilding.”
Biden said that collective bargaining is “critical to building a stronger economy from the middle out and the bottom up.”
The union’s membership won’t need to vote on the temporary suspension of the strike. Until Jan. 15, the workers will be covered under the old contract, which expired on Sept. 30.
The union had been demanding a 77% raise over six years, plus a complete ban on the use of automation at the ports, which members see as a threat to their jobs. Both sides also have been apart on the issues of pension contributions and the distribution of royalties paid on containers that are moved by workers.
Thomas Kohler, who teaches labor and employment law at Boston College, said the agreement to halt the strike means that the two sides are close to a final deal.
“I’m sure that if they weren’t going anywhere they wouldn’t have suspended (the strike),” he said. “They’ve got wages. They’ll work out the language on automation, and I’m sure that what this really means is it gives the parties time to sit down and get exactly the language they can both live with.”
Kohler said the surprise end to the strike may catch railroads with cars, engines and crews out of position. But railroads are likely to work quickly to fix that.
Just before the strike had begun, the Maritime Alliance said both sides had moved off their original wage offers, a tentative sign of progress.
Thursday’s deal came after Biden administration officials met with foreign-owned shipping companies before dawn on Zoom, according to a person briefed on the day’s events who asked not to be identified because the talks were private. The White House wanted to increase pressure to settle, emphasizing the responsibility to reopen the ports to help with recovery from Hurricane Helene, the person said.
Acting Labor Secretary Julie Su told them she could get the union to the bargaining table to extend the contract if the carriers made a higher wage offer. Chief of Staff Jeff Zients told the carriers they had to make an offer by the end of the day so a manmade strike wouldn’t worsen a natural disaster, the person said.
By midday the Maritime Alliance members agreed to a large increase, bringing about the agreement, according to the person.
