On Thursday, October 3, three days after the strike began, joint statements from the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) management group, representing shipping lines, terminal operators and port authorities, announced a tentative agreement that extends the current master contract to January 15, 2025.
The tentative agreement includes a 61.5% wage increase over the life of the six-year contract — raising average wages from $39 an hour to about $63 an hour. The ILA originally had requested 77%, and the USMX countered with 50% earlier in the week.
The union members went back to work on Friday, October 4 while the final details are worked out in a full agreement that will need to be ratified by rank-and-file members. In the interim, freight rates surged and shipping stocks sank. The ILA issued a memo to its members outlining the tentative agreement reached last week with USMX on wages.
The subjects of health care and automation continue to be a point of contention. European ports have addressed automation with an agreement to no layoffs, early pensions, and extensive retraining.
On October 2, more than 175 organizations — including the California Chamber of Commerce — representing U.S. manufacturers, farmers and agribusinesses, wholesalers, retailers, restaurants, importers, exporters, distributors, transportation and logistics providers, and other supply chain stakeholders sent a letter to President Joe Biden calling on the administration to intervene.
The ILA strike affected 45,000 dockworkers at 36 container ports from Texas to Maine — including New York/New Jersey, Houston, and Savannah, Georgia. The contract in question covers six of the 10 busiest U.S. ports, which collectively handle more than 13 million containers annually.
As of Thursday, October 3, at least 54 container ships had lined up outside the ports as the strike prevented unloading, according to Everstream Analytics, threatening shortages of anything from bananas to auto parts. More than another 120 container ships were en route, so the impact will be felt for weeks.
Administration Statements
Several administration officials issued statements on the deal:
- President Biden
- Vice President Kamala Harris
- Acting Secretary of Labor Julie Su
- Secretary of Transportation Pete Buttigieg
The strike had the potential to disrupt U.S. supply chains, pose national security implications, and in general terms, paralyze as much as half the nation’s seaborne trade volumes.
Shipping Data
Nearly 70% of U.S. exports and 56% of containerized U.S. imports come through East Coast and Gulf Coast ports, according to data cited by the National Association of Manufacturers. More specifically:
- More than 68% of all containerized exports and more than 56% of containerized imports flow through East and Gulf Coast ports, representing an average daily trade value of more than $2.1 billion.
- They handle more than 91% of containerized imports and 69% of containerized exports of pharmaceutical products.
- They also process more than 76% of containerized vehicle exports and more than 54% of containerized vehicle imports.
- For aircraft and spacecraft, more than 77% of containerized exports and more than 51% of containerized imports go through these ports.
Products Affected
Perishable food imports, wine, auto parts and pharmaceuticals from Europe could have been greatly affected. Ports on the East and Gulf coasts handle roughly 75% of the bananas that enter the United States. There is a no strike pledge for U.S. military goods and passenger cruise vessels would not have been affected. The ILA has not gone on strike since 1977.
The labor dispute came at a critical time for retailers and consumers preparing for the holiday season.
Oxford Economics estimated that a strike would have cost the U.S. economy $4.5 billion to $7.5 billion a week.
Maersk, the Danish shipping company, has warned that even a one-week shutdown could result in 4–6 weeks of recovery time, with significant backlogs and delays compounding each day.
Analysts at Sea-Intelligence, a Copenhagen-based shipping advisory firm, estimate it could take anywhere from four to six days to clear the backlog from a one-day strike. A two-week strike could have meant that ports would not have returned to normal operations until 2025, Sea-Intelligence said.
West Coast Impact
A prolonged shutdown would have affected West Coast ports, eventually leading to capacity and empty container shortages.
Imports to the U.S. West Coast ports have been increasing. Container carriers have been rerouting Halloween costumes and Christmas items in preparation for the labor action. And manufacturers have been purchasing solar panels and other goods targeted for potential tariff increases. This rerouting adds time and costs to businesses and the consumer.
The strike came at a challenging time for ocean supply chains, which already have faced significant disruptions this year with the drought in the Panama Canal, the Baltimore Bridge collapse, and the Red Sea conflict. There was talk of West Coast workers being unwilling to unload cargo originally bound for the East Coast and a worst-case scenario if the West Coast dock workers walked out in solidarity.
The Federal Maritime Commission (FMC) had warned carriers and operators against imposing excessive detention and demurrage fees during the strike, to protect shippers from unfair charges such as occurred during the pandemic-related port congestions.
Coalition Request
On September 17, a coalition of 177 trade associations wrote to ask President Biden to intervene, warning of severe economic consequences if a deal wasn’t reached. The letter stated, “A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend.”
The administration faced pressure to intervene but expressed reluctance to invoke the Taft-Hartley Act by imposing an 80-day cooling-off period. On Sunday, September 29, President Biden said he did not intend to intervene to prevent a walkout. “It’s collective bargaining. I don’t believe in Taft-Hartley,” he told reporters.
The Biden administration did step in to help the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) resolve their 29 West Coast port labor negotiations in 2023 after their contract expired July 1, 2022. The West Coast ports account for more than 44% of nationwide container port traffic.
CalChamber Position
The CalChamber believes an immediate resolution to this strike was needed for the East Coast, and the nation as a whole. The CalChamber knows from recent history that any blip in the supply chain disrupts commerce, delays critical goods from reaching the market, and drives up costs for businesses and consumers.
