Ports rush to reopen after first major strike in decades is suspended

Hours after a longshoremen’s union on the East and Gulf coasts agreed to suspend its strike, major ports rushed to reopen Friday and get cargo to businesses that have spent the last few days racked with fear over lost sales.

The strike, which began Tuesday and shut down many of the nation’s largest shipping hubs, threatened to weaken the economy weeks before a national election. The Biden administration spent the last few days pressing the United States Maritime Alliance, the group representing port employers, and the union, the International Longshoremen’s Association, to find a way to end the strike.

The two sides announced late Thursday that they had reached a tentative agreement on wages — a 62% increase over six years — and said they were extending the current contract until mid-January to negotiate other issues. The biggest remaining one is the use of automated machinery at the ports, which the ILA considers a job killer. It was the first full-scale stoppage at East and Gulf coast ports since 1977.

Labor experts say the ILA has more leverage in contract negotiations than unions in most other industries, because a walkout can shut down shipping facilities for which there are no practical alternatives. Labor experts said the wage increase was a big victory for the ILA and its combative president, Harold J. Daggett, a 78-year-old, third-generation dockworker.

“The ILA seized the moment,” said William Brucher, an assistant professor at the Rutgers School of Management and Labor Relations. “Things really aligned in their favor.”

Analysts said the strike was unlikely to lead to higher prices for consumers.

Many businesses, anticipating the walkout, sped up their shipments so they could receive them before this week, softening the blow for many.

But some remained concerned that the backup from the three-day shutdown could cause delays in receiving goods in time for the holiday season.

John Wrenn, the chief operating officer at MHW, an alcoholic beverages distributor in Manhasset, New York, said dozens of his shipments had been delayed because they were sitting on ships outside the Port of New York and New Jersey.

“People are getting back to work. The impact to us is greatly reduced,” he said. “But we are missing sales opportunities on these products.”

Wrenn said he had shipped in a small amount of goods by air to ensure he could meet customers’ orders, but airfreight, he said, is five to 10 times as expensive as using ocean carriers.

On Friday, two dozen commercial vessels were waiting to enter the Port of New York and New Jersey — including 19 container ships, the port’s director, Beth Rooney, said in a news conference.

Rooney said she expected the logjam to clear quickly, noting that there had been several occasions when winter storms closed the port for three or four days and that recovery had been quick.

She also disputed some analysts’ projections that a day’s backlog at a port could take a week to clear.

“Having done this several times in my 35-year career, I have not seen it,” she said.

Once the cargo is unloaded at a port, it has to be transported to its destination by truck or train. J. Bruce Chan, a transportation analyst at Stifel, a Wall Street firm, said there was ample truck capacity right now to handle the extra loads.

“It probably is going to be barely discernible, especially for the end consumer,” he said.

Supply chain experts say they are most concerned about the impact on global shipping, which has gone through wrenching disruptions in recent years. Most recently, the Houthi attacks on shipping in the Red Sea prompted ocean carriers to stop using the Suez Canal and take a much longer route around the Cape of Good Hope in South Africa.

The diversion has forced shipping companies to deploy more vessels to try to deliver goods on time. And by causing vessels to idle off the East and Gulf coasts, the strike may have caused shipping capacity to become more strained.

“Because you had the delay of vessels here, you’re going to have a delay in getting those ships back to Asia,” said Greg Miller, a senior maritime reporter for Lloyd’s List, a trade publication.

He said that 60 cargo ships were waiting outside the East and Gulf coast ports Thursday, and that he expected the number to rise in the coming days, even as ports began to resume activity.

When congestion was its worst at the ports, in 2022, around 100 vessels were waiting to dock, Miller said.

Congestion can push up ocean freight costs.

The cost of shipping a container is 250% higher than it was a year ago, according to an index from Freightos, a digital shipping marketplace, pushed higher by the Houthi attacks, which started at the end of last year.

Longshoremen with several years of experience earn a lot more than workers in other professions that don’t require a college degree. At the Port of New York and New Jersey, nearly 60% of the longshoremen made $100,000 to $200,000 in the 12 months that ended in June 2020, according to the latest figures available from the agency that helped oversee the port.

Increasing wages by 62% — as proposed in the tentative agreement — could push up port costs that may be passed onto the businesses that ship goods, some economists said.

“I cannot recall an episode that had so little effect on the economy, led to such a short strike and resulted in such a huge increase in earnings for workers who are already making over $100,000 a year,” said Patrick L. Anderson, the CEO of the Anderson Economic Group, a consultancy. “We tend to shrug off the costs, but it does affect our ability to build things and export them.”

Longshoremen defend their big paychecks, saying they work long hours for them, often in harsh conditions. They also assert that they are asking for a small portion of the outsize profits that the port employers made during the pandemic trade boom in 2021 and 2022.

“We are humbly asking and boldly insisting that we share in a sliver of the benefits,” said Leonard Riley, a longshoreman for nearly 50 years at the Port of Charleston in South Carolina.

The big question now is whether the union and the Maritime Alliance can reach a permanent deal by mid-January. Though a wage increase has been agreed to, there is still much that divides the two sides.

The current contract gives the ILA some protection against automation, banning equipment that is “devoid of human interaction.” But that provision has not stopped operators at some East Coast ports from introducing large cranes that can sort containers without a person directing their moves.

As a result, the union may press for tighter language that port employers may resist, believing automation is necessary to make their facilities more efficient.

“I think both sides are pretty far apart on the automation issue,” Chan said.

An ILA spokesperson did not comment on the talks. In a statement, the Maritime Alliance said, “We have a tentative agreement on wages that is contingent on us bargaining all open issues — including technology.”

Many longshoremen believe that manned equipment can operate as effectively as automated machinery.

“If we are talking about productivity, we are delivering that faster than the places that are much more automated than we are,” Riley said.

This article originally appeared in The New York Times.

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