White House sides with union as US dockworker strike enters second day

NEW YORK: President Joe Biden’s administration heaped pressure on US port employers to raise their offer to secure a labour deal with dockworkers, whose strike entered a second day on Wednesday (Oct 2), choking half the country’s ocean shipping.

The strike by the International Longshoremen's Association union has blocked goods from food to automobile shipments across dozens of ports from Maine to Texas, a disruption that analysts warn will cost the economy billions of dollars a day.

More than 38 container vessels were already backed up at US ports by Tuesday, compared with just three on Sunday before the strike, according to Everstream Analytics.

"Foreign ocean carriers have made record profits since the pandemic, when longshoremen put themselves at risk to keep ports open. It’s time those ocean carriers offered a strong and fair contract that reflects ILA workers’ contribution to our economy and to their record profits," Biden said in a post on X late on Tuesday.

He directed his team to monitor for potential price gouging that benefits foreign ocean carriers, the White House said.

The ILA, which represents 45,000 port workers, launched its strike on Tuesday, just after midnight after negotiations with the United States Maritime Alliance (USMX) for a new six-year contract collapsed.

USMX had offered the union a 50 per cent wage hike, but the ILA's leader, Harold Daggett, said the union is pushing for more, including a US$5-per-hour raise for each year of the new six-year contract and an end to port automation projects that threaten union jobs.

"We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve," Daggett said on Tuesday.

Hundreds of dockworkers demonstrated at a New York City area shipping terminal in Elizabeth, New Jersey, on Tuesday, carrying signs and shouting slogans like "ILA all the way!" as music blared and vendors hawked food.

Morgan Stanley economists said in a late Tuesday note that the strike could hit growth and raise inflation "but only if it is long-lasting," noting that the implication for transport should be limited unless the strike lingers.

Lars Jensen, head of shipping consultancy Vespucci Maritime, said the breakdown in negotiations between the two sides signalled the strike could last longer than just a few days.

"Unless USMX backs down and fulfils ILA’s requirements, there appears to be little chance of a short-term resolution," he said.

Retailers accounting for about half of all container shipping volume said they have been busily implementing backup plans to minimise the impact of the strike as they head into the winter holiday sales season.

Shares of shipper Maersk fell 2 per cent in Copenhagen on Wednesday.

WATERWAYS CRUCIAL TO TRADE

The strike, the ILA's first major stoppage since 1977, is worrying businesses that rely on ocean shipping to export their wares or secure crucial imports. It affects 36 ports - including New York, Baltimore and Houston - that handle a range of containerised goods ranging from bananas to clothing to cars.

Roughly half of US imports arrive via water, while 37 per cent of exports are waterborne, Morgan Stanley noted.

The walkout could cost the American economy roughly US$5 billion a day, JP Morgan analysts estimate.

The National Retail Federation called on Biden's administration to use its federal authority to halt the strike, saying the walkout could have "devastating consequences" for the economy.

Republicans, including Virginia Governor Glenn Youngkin, have also called on Biden to end the strike, warning of its effect on the economy. Biden has repeatedly said he will not do so.

The US Department of Agriculture said on Tuesday it does not expect significant changes to food prices or availability in the near term.

“The longer the strike action goes on and the longer it takes the US government to intervene, the deeper the damage will be to the economy and the longer it will take for ocean supply chains to recover,” said Peter Sand, chief analyst at shipping data company Xeneta.