The International Longshoremen’s Association (ILA) has accused this Monday the alliance of businessmen who operate more than a dozen large ports in the United States of blocking negotiations and leading workers to a massive strike, with serious effects on the supply chain and estimated losses of up to $5 billion per day, if the parties do not reach an agreement before midnight this Monday. It would be the first strike in the sector in decades, against which some shipping companies have already begun to charge surcharges for “disruption” of the service in the most complicated scenario for the supply chain since the coronavirus pandemic.
The union represents more than 85,000 workers and has been negotiating salary improvements with companies, terminal operators and port associations represented in the United States Maritime Alliance (USMX) since last May; Important foreign companies such as the Danish Maersk and the Chinese Cosco are represented in the association. Thousands of workers on the East and Gulf coasts could join the strike starting tonight. “Marine carriers represented by USMX want to enjoy the multimillion-dollar benefits they are obtaining in 2024, while they offer ILA port workers an unacceptable salary package that we reject,” the union reported in a statement.
Both Maersk and Cosco have been the target of criticism from the ILA for not translating part of their profits into better wages for dockers. Cosco, for example, recorded revenue of $63.22 billion in 2022, according to figures provided by the union, while Maersk took in more than $51 billion in the same period. “It is shameful that the majority of these foreign-owned shipping companies behave like this,” reaping profits without giving anything in return, the workers’ statement continues. The probability of a strike does not seem to have worried the market, since in Monday’s session Maersk posted profits of 3.91% and the Chinese state-owned Cosco, 2%.
“Congestion and delays at these large ports will seriously affect the availability of containers, increase costs and disrupt scheduled schedules,” Christian Roeloffs, CEO of ContainerxChange, which manages a large part of the global container market, warned his clients on Thursday. containers and works with more than 1,500 shipping companies.
The employer filed a complaint last week alleging unfair labor practices and asked the National Labor Relations Board, the federal arbitration court, to force the union to resume bargaining. The White House of the most pro-union president in recent history, Joe Biden, and several federal agencies have mobilized to bring the parties back to the negotiating table and avoid strikes that could be a serious setback for the national economy. According to Miter Corporation, the strike, the first since 1977, would affect ports and facilities that manage approximately 51% of the country’s total port capacity. By extension, a mass strike would have a clear rebound effect on many sectors of the US economy, from food imports to supplies for the automotive or pharmaceutical industries. A potential shortage would immediately be reflected in a higher cost of thousands of products, as happened with the global disruption of supply chains that followed the pandemic and which, among other factors, contributed so much to fueling inflation. A rise in prices in the event of prolonged unemployment would be very bad news for the electoral expectations of the Democratic candidate Kamala Harris, as well as a weapon for her opponent, the Republican Donald Trump.
The estimate of potential damage per day of downtime is between $1 billion and $5 billion, according to an analysis by the giant ContainerXChange and the JP Morgan bank. According to Oxford Economics, a prolonged strike could affect up to 100,000 jobs and cost the US economy between $4.5 billion and $7.5 billion for each week it lasts.
“Companies are already preparing to redirect shipments and secure their supply of containers, so as not to run the risk of being trapped in a costly sequel to disruptions” in maritime traffic, Roeloffs said Thursday, pointing specifically to small businesses as one of the most affected sectors by not having surpluses. To minimize the potential impact, MSC, a major shipping company, reported on Thursday possible adjustments to bookings, including transfers to other ships or cancellations of cargo. It will also reserve the right not to accept new refrigerated reservations at the affected ports if the strike takes place.
Hapag-Lloyd plans to apply a “destination work interruption surcharge” on imports destined for the Gulf and the East Coast of the United States. Maersk has imposed a similar surcharge that will take effect on October 21, depending on the impact of the hypothetical supply chain disruption. Another major operator, CMA-GCM, announced on September 17 a series of changes to its port rates, which will come into effect on October 11.
