The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMEX) agreed on the evening of Thursday, October 4, to a tentative deal on wages and to have the previous contract between the parties extended through January 15, 2025, to continue negotiations on the future contract. The Joint Statement by the ILA and USMEX was published on the ILA’S Facebook page.
The agreement came after the White House pressed both parties to come into an agreement and end the strike, and to have President Biden use the 1947 Taft-Hartley Act to force the longshoremen back to work. But throughout the dispute, he encouraged the sides to keep talking to reach a deal.
It is said that Biden administration officials worked behind the scenes with both sides to try to bring about a resolution in the days and weeks leading to the deal. These efforts culminated on Thursday, when labor secretary Julie Su traveled to New Jersey to meet with the union’s leaders to secure their agreement.
While the strike lasted less than a week, it had already started to cause issues to the U.S. supply chain. Thousands of containers had been dumped at the wrong ports, and billions of dollars in goods were anchored offshore because port were not operation, and shipping costs had already started to rise. In fact, the strike could have crippled the U.S. supply chain and cost the country's economy more than $4. billion a day, according to one JPMorgan analysis.
Samuel Tombs and Oliver Allen, economists at Pantheon Macroeconomics, were interviewed by the New York Times, and expressed that supply chains had enough flexibility such that a one-week strike would have a negligible impact on the American economy. Brief strikes by workers on the West Coast in 2002 and 2015 had no discernible impact. But anything longer than a weeklong strike would have weigh on the manufacturing and retail sectors and cause those businesses to shed jobs in the coming months, they predicted. Automakers would have eventually run out of certain products, and shortages could come sooner if consumers engage in panic buying, they said.
Economists at Goldman Sachs also said in a note Tuesday, October 2, that a longer strike could force U.S. factories to scale back production, resulting in a bigger drag on the economy. A full 10-day shutdown of the ports would result in a 0.2-percentage-point hit to fourth-quarter gross domestic product, they predicted.
About three-fifths of annual container trade goes through the East and Gulf Coast ports, including the Port of New York and New Jersey, the third busiest in the country, and fast-growing ports in Virginia, Georgia, and Texas.
ILA wages will increase 61.5% over six years under the tentative agreement, but the major point of contention between the parties regarding automation remains under negotiation. While the USMX wants to keep automation in the proposed agreement, the ILA wants automation to be completely absent from it.
The dockworkers in strike are some of the “highest-paid blue-collar workers in the country” according to the American Prospect. The current hourly wage of the dockworkers is $39, and they want to eventually increase it to $69 over the next six years. The USMX’s last offer was that of a 50% raise over a six year period. The dockworkers argue that the shipping companies have made huge profits in recent years and that the cost of living, accompanied by inflation, warrants them to get an increase in wages.
Back in June, workers in Mobile, AL and other ports accused the employer of automating tasks intended to be performed by ILA members. The ILA has been vocal about its desire to secure guarantees against automation going forward; automation remains the main contention point between the parties and them coming into an agreement.
Critics of the tentative agreement say it will push up costs for importers and exporters.
“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 chief executive of the business consultancy company Anderson Economic Group. “We tend to shrug off the costs, but it does affect our ability to build things and export them.”
At the Port of New York and New Jersey, nearly 60 percent of the longshoremen made $100,000 to $200,000 in the 12 months through June 2020, the latest figures available, according to data from an agency that helped oversee the port.
However, the ILA believes that the port employers can afford to pay the unionized dock workers more, especially after making outsize profits during the pandemic surge in trade in 2021 and 2022.
Businesses often face disputes over contracts and negotiations of terms in such contracts, which could lead to delays in starting projects, and exposure to liability arising from the disruptions. Therefore, business owners must review their contracts with employees and potential new business partners in light of these potential disruptions and maintain a contingency plan to minimize damages or delays. Good contract drafting, dispute resolution negotiation skills, and due diligence are essential in securing an issue-free start to a new business venture or project.
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Sources:
Eavis, Peter. “Port Union Agrees to Suspend Strike.” The New York Times, The New York Times, 3 Oct. 2024, www.nytimes.com/2024/10/03/business/economy/port-strike-suspended.html.
Goodman, Peter S. “Truckers See Ports Turn Into Ghost Towns, and Worry About Their Future.” The New York Times, The New York Times, 1 Oct. 2024, www.nytimes.com/2024/10/01/business/economy/dockworkers-strike-newark-port.html.
Jobin, Alex. “Longshoremen Strike Suspended, Ports to Reopen.” Alabama Political Reporter, 4 Oct. 2024, www.alreporter.com/2024/10/04/longshoremen-strike-suspended-ports-to-reopen/.
Leswing, Kif, and Lori Ann LaRocco. “Port Strike Ends as Workers Agree to Tentative Deal on Wages and Contract Extension.” CNBC, CNBC, 3 Oct. 2024, www.cnbc.com/2024/10/03/port-strike-ends-as-workers-agree-to-tentative-deal-on-wages-and-contract-extension.html.
Rappeport, Alan, and Ana Swanson. “U.S. Faces Economic Turbulence Just as Recession Fears Eased.” The New York Times, The New York Times, 3 Oct. 2024, www.nytimes.com/2024/10/03/us/politics/us-economy-inflation-port-strike-helene-israel.html.
