U.S. Dockworkers Agree to Suspend Strike

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U.S. dockworkers agreed to end a three-day strike that had paralyzed trade on the U.S. East and Gulf coasts and threatened to become a factor in the presidential election.

The International Longshoremen’s Association and the U.S. Maritime Association extended their previous contract through Jan. 15, the two groups said in a joint statement Thursday. Work will restart Friday morning and the two sides will restart negotiations on a long-term agreement, which will include a pay increase of about 62%.

Fears of a sustained emergency swelled through the week, with analysts and industry officials warning that the disruption would quickly extend beyond the containerized imports, exports, and autos impacted directly by the walkout. Estimates of the cost to the U.S. economy ranged from $3 billion to $5 billion per day.

“The strike is over,” ILA Local 333 President Scott Cowan told a CBS affiliate just after delivering the news to members gathered at the picket line outside the Port of Baltimore. 

The agreement gives the ILA and USMX—as the group of terminal operators and shipping liners is known—time to resolve even more contentious issues without threatening the U.S. economy just weeks ahead of the election. Shares of shipping lines in Asia fell as the suspension of the strike damped expectations that container rates would rise due to reduced capacity.

“We’re going to receive a 61.5% increase over the next six years and we’re going to have other language to protect us from automation worked out over the next few months, and other issues that we need resolved,” Cowan said. 

Crises averted

Americans started to panic over potential shortages. Some anxious shoppers stocked up on goods, especially in areas affected by Hurricane Helene, which hit several Southeastern states with flooding and power outages. One national grocery store chain set purchase limits on paper towels, toilet paper and water, adding to pressure on President Joe Biden to intervene.

The deal neutralizes a potential political issue for the White House and the campaign of Vice President Kamala Harris. A prolonged strike would have forced her to confront a crisis that fueled inflation.

It also spares Biden from having to put any public pressure on the ILA as he and Harris fight GOP nominee Donald Trump for the support of union’s rank and file members. A deal, however temporary, means Biden won’t have to decide whether to bear the political burden of a crippling strike or distance himself from the demands of the union.

Even though the strike lasted just three days, the cargo backlog is likely to take over a month to clear, according to project44, a supply chain data company in Chicago. Port terminals began battening down the hatches days ahead and it will take them a while to fully re-open. 

In the meantime, dozens of ships carrying containers and autos are anchored off the coast of major trade hubs in New York, South Carolina and Virginia and will continue arriving faster than they can be unloaded.

‘Going to hold’

President Biden, who sided with the union, commended both sides and linked the port closures to hurricane recovery efforts.

“I want to thank the union workers, the carriers, and the port operators for acting patriotically to reopen our ports and ensure the availability of critical supplies for Hurricane Helene recovery and rebuilding,” Biden said in a statement Thursday after the deal was announced. “Collective bargaining works.”

Retailers, agricultural exporters and the U.S. Chamber of Commerce have been sounding the alarm since the ILA called off negotiations with the USMX in June. Hundreds of industry associations had called on Biden head off the strike even before it started.

The National Retail Federation applauded the decision to reopen ports while negotiations continue, and said “it is critically important” that the two sides sign a final deal ahead of the new deadline to prevent a repeat scenario in three months.

“The sooner they reach a deal, the better,” CEO Matthew Shay said.

While the ILA and USMX found common ground on wages, the remaining issues may prove to be thornier ones. ILA chief Harold Daggett has railed against the foreign-owned companies he says want to replace union jobs with robots, and says he won’t quit until language on technology in the next contract is tightened up. The companies have offered to leave it as is, which they see as a concession. 

Biden expressed optimism about the strike suspension.

“We’ve been working hard on it,” he told reporters Thursday evening. “By the grace of God and good will of neighbors, it’s going to hold.”

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