On early Tuesday morning, the International Longshoremen's Association (ILA) union officially initiated a strike across the East and Gulf Coast ports after rejecting the final contract proposal from the United States Maritime Alliance (USMX). This unprecedented action has seen tens of thousands of dockworkers commence picketing at waterfront facilities along the Atlantic and Gulf coasts, effectively closing ports from Maine to Texas, marking the first strike of this magnitude in nearly half a century. The USMX alliance, which represents a collective of terminal operators and ocean carriers, had previously offered an increase in wages by nearly 50%, as well as proposals aimed at retaining existing terms regarding automation and semi-automation, as communicated on Monday.
However, the ILA, which boasts representation for approximately 85,000 dockworkers, claimed that the last offer was inadequate in terms of their demands regarding wages and essential protections against automation, leading to the decision not to ratify the contract. ILA President Harold Daggett vocally expressed the union's commitment, stating, "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." He conveyed this message via a post on the union's official Facebook page.
The USMX agency, at the onset of the strike, had yet to respond to inquiries from MT Newswires regarding the ongoing situation. The ramifications of this strike could potentially cost the United States economy as much as $540 million per day, according to a statement released by the Conference Board.
The board specifically highlighted that electronics and automobiles would be among the products most likely affected by the strike's disruptive effects. Moreover, the Conference Board cautioned that even a brief shutdown of the ports might lead to supply chain disruptions that could extend for weeks.
This is particularly critical as the 36 East and Gulf coast ports are responsible for over 57% of the container volume handled in the United States. The closure of these ports threatens to further escalate logistical and supply chain expenses, potentially resulting in product shortages for numerous retailers.
In a recent note, Truist Securities noted that while companies had put contingency plans into place expecting minimal short-term impact, an extended duration of the strike would likely spark significant costs and hinder sales. Analysts led by Managing Director Scot Ciccarelli indicated that, "In our view, the heaviest negative impacts would likely be on Dollar Tree, Five Below, Target, Best Buy, and Walmart.
But it would likely be a headwind of some level across the board." Additionally, it's projected that nearly two-thirds of all U.S. trade is set to be influenced by the strike, potentially disrupting the delivery of a wide array of goods ranging from fruits and beverages to auto parts and even Christmas trees.
This sentiment was echoed in a separate client note released by Stifel Economics on the same day of the strike's initiation..