By Lisa Baertlein, Timothy Aeppel and David Shepardson
(Reuters) – U.S. East and Gulf Coast port workers are set to go on strike at midnight on Monday with no talks currently scheduled to head off a stoppage threatening to halt container traffic from Maine to Texas and cost the economy as much as $5 billion a day.
The labor contract between the International Longshoremen’s Association (ILA) union representing 45,000 port workers and the United States Maritime Alliance (USMX) employer group expires late Monday, with negotiations at an impasse over pay.
A port strike will go ahead starting Tuesday at 12:01 a.m. ET, the ILA said on Sunday. The USMX “refuses to address a half-century of wage subjugation,” the union said in a statement on Sunday.
If union members do walk off the job, it would be the first coast-wide ILA strike since 1977, affecting ports that handle about half of the nation’s ocean shipping.
No negotiations are taking place and none are planned before the Monday deadline, a person familiar with the matter said on condition of anonymity as the matter is a sensitive one.
The union has previously said the strike would not impact military cargo shipments or cruise ship traffic.
But a strike could stop the flow of everything from food to automobiles at major ports, potentially jeopardizing jobs and stoking inflation weeks ahead of the U.S. presidential election.
Business Roundtable, which represents major U.S. business leaders, said it was “deeply concerned about the potential strike at the East Coast and Gulf Coast ports.”
The group warned a labor stoppage could cost the economy billions of dollars daily, hurting businesses, workers and consumers across the country. “We urge both sides to come to an agreement before Monday night’s deadline.”
A short strike could have a limited economic impact given many companies have imported extra goods ahead of a possible work stoppage or shifted more shipments to West Coast ports. But a strike that continues for weeks could have serious economic impacts.
“These people today don’t know what a strike is,” Harold Daggett, the ILA’s fiery leader, said in a recent video post. “I’ll cripple you. I will cripple you.”
For months, Daggett has threatened to shut down the 36 ports covered by his union if employers like container ship operator Maersk and its APM Terminals North America do not deliver significant wage increases and stop terminal automation projects.
The dispute is worrying businesses that rely on ocean shipping to export their wares, or secure crucial imports.
Steve Hughes, CEO of HCS International, which specializes in automotive sourcing and shipping, accused the ILA of “holding the entire country over a barrel.”
HIGH STAKES
An ILA strike could wedge labor-friendly President Joe Biden into a no-win position as Vice President Kamala Harris runs a razor-tight election race against former President Donald Trump.
Biden on Sunday said he did not intend to intervene to prevent a walkout if dock workers failed to secure a new contract.
U.S. presidents can intervene in labor disputes that threaten national security or safety by imposing an 80-day cooling-off period under the federal Taft-Hartley Act, forcing workers back on the job while negotiations continue.
On Friday, Biden administration officials met with the USMX employer group to directly convey “that they need to be at the table and negotiating in good faith fairly and quickly” – a message it had delivered earlier to the ILA.
The USMX has accused the ILA of refusing to negotiate.
Retailers that account for about half of all container shipping volume, and are headed into their all-important winter holiday sales season, have been busily employing backup plans.
“There is potential for another violent move across consumer stocks next week if – as is consensus thinking – the East Coast Longshoremen do indeed strike,” Jefferies analysts said in a client note.
Many of the big retail players rushed in Halloween and Christmas merchandise early to avoid any strike-related disruptions – incurring extra shipping and storage costs.
Retail behemoth Walmart (NYSE:WMT), the largest U.S. container shipper, and membership warehouse club operator Costco (NASDAQ:COST) say they are doing everything they can to mitigate any impact.
But a lot of shippers do not have that flexibility as they are small, do most of their business on the East and Gulf Coasts or lack the financial might to load up on safety stock.
Ash Bhardwaj, CEO of Onx Homes, has factories in Florida and imports materials used to build homes in the company’s planned communities through the Port of Miami.
Like other shippers in his position, he was resigned to his fate. “Everyone will have the same problem,” Bhardwaj said.
