The new threat that loomed over global supply chains, hard hit since Covid by the rigors of the pandemic and subsequent geopolitical tensions, has been momentarily dissipated. Stevedores at US East Coast and Gulf Coast ports have agreed in recent hours to resume the movement of goods while continuing to negotiate a new collective agreement with their employers.
The International Longshoremen’s Association (ILA) has agreed extend the contract until January 15 and work will resume this Friday, the union said in a statement Thursday. “The strike is over,” ILA Local 333 President Scott Cowan told the ILA affiliate. CBS in Baltimore, specifying that longshoremen will return to work on Friday morning to load and unload goods after three days of work stoppage.
Cowan said the union has accepted an offer that would increase salaries by 61.5% in the new six-year contract“and we will have another language to protect us from automation worked on in the coming months and other issues that we need to resolve.” The union’s claims were up to 77%.
container ports from Houston to Miami and from there to Boston have remained closed since the labor contract between the ILA and the US Maritime Alliance, which represents terminal operators and shipping companies, expired on Tuesday. In recent days, dozens of ships loaded with containers and cars have anchored off the coasts of important commercial hubs such as New York, South Carolina and Virginia. According to analysts, the cargo accumulated during the three days of port closures is likely to take 12 days to clear.
It was unclear Thursday whether the terminals – which had to completely shut down operations before the strike – would open this weekend to help clear the backlog. APM Terminals in Mobile, Alabama, said in a notice to customers that it would resume operations at 7 a.m. local time on Friday, although “weekend hours have not been decided at this time.”
President Joe Biden, who had pressured port employers and shipping companies to reach an agreement with striking dockworkers, has praised both sides and linked port closures to hurricane recovery efforts. “A port strike with the resulting shortage of goods for households It’s not something the White House wants to see a month before the election.and President Biden has pushed hard for shipping companies and port owners to reach an agreement with the union (almost at any price, it seems)”, SEB analysts have assessed. “Only five weeks away in a presidential election in which inflation and the prices of consumer goods will be key issues, this strike is especially delicate,” agrees Kaspar Köchli, economist at Julius Baer.
“I want to thank union workers, shippers and port operators for acting patriotically to reopen our ports and ensure the availability of critical supplies for the recovery and rebuilding following Hurricane Helene,” Biden said in a statement Thursday after the announcement of the agreement. “Collective bargaining works.” Industry groups have been sounding the alarm since June, when the ILA suspended negotiations with the US Maritime Alliance, and have called on Biden to intervene to end the strike.
The National Retail Federation has applauded the decision to reopen the ports while negotiations continue, and has stated that “it is vitally important” that the two parties sign a definitive agreement before the new deadline to avoid a repeat of the situation. January 15. “The sooner they reach an agreement, the better,” CEO Matthew Shay said in a statement.
Too much economic alarmism?
In macroeconomic terms, the concern is that a major strike at ports will disrupt supply chains and exert an upward pressure on the prices of goodsjust as the Federal Reserve has finally declared victory against inflation. Nearly a third of all goods imports enter the US through the affected ports and the cost of shipping cargo to the East Coast has already increased markedly this year, Capital Economics notes. The truth is that East Coast ports handle approximately half of the country’s maritime cargo, including 14% of maritime agricultural exports and more than half of U.S. imports.
However, the same analysis house believes that these fears about the possible economic repercussions were exaggerated: “The frequent disruptions to supply chains in recent years have made producers more aware of the risks of having inventories low”.
“Despite the alarmism of some media, the dockers’ strike is unlikely to have serious economic repercussions or cause a rise in inflation similar to that of 2021-2022. Estimates suggest that the economy could lose between 4,000 and 8,000 million dollars of economic activity each week of the duration of the strike. The last figure for the US GDP was 29 trillion dollars annually. Assuming that the forecast is 8,000 million, each week that the port strike lasts the GDP will decrease by 0.027%. Even if the port strike lasted an entire quarter, it would only cut a third of GDP. Keep in mind that, for the most part, economic activity is not lost due to the strike; it is only delayed,” point out the analysts at Real Investment Advice (RIA).
