WASHINGTON — Approximately 45,000 longshoremen in the United States are on the brink of a strike that threatens to bring operations to a halt at ports along the East and Gulf coasts, potentially impacting the economy just as President-elect Donald Trump prepares to return to office.
This situation is reminiscent of a previous walkout by the same dockworkers, organized under the International Longshoremen’s Association (ILA), which occurred last fall and lasted three days. In that instance, the strike was paused after the workers reached a tentative agreement with port and shipping companies promising a 62% wage increase spread over six years. However, for these higher wages to come into effect, union members must first give their approval to the final contract.
The negotiations are set to resume on Tuesday between the ILA and the U.S. Maritime Alliance, which advocates for ports and shipping interests. A contentious issue in these discussions centers on the growing use of automation in the workforce, particularly the increasing deployment of semi-automated cranes that rely on software or remote operators to manage the movement of containers. Traditional cranes, by contrast, require a human operator at the controls.
The union, led by President Harold Daggett, is strongly opposed to further automation at ports on the East and Gulf coasts. They assert that machinery does not offer any significant efficiency advantages over human labor.
“This is not merely about addressing operational requirements,” wrote Dennis Daggett, Harold Daggett’s son and executive vice president of the union, in a statement last month. “It’s about substituting human workers under the pretense of improving efficiency, all to maximize corporate profits to the detriment of well-paying jobs for American families.”
In contrast, port operators and shipping firms maintain that U.S. ports are lagging behind more technologically advanced facilities, such as those in Rotterdam, Dubai, and Singapore.
With a strike deadline looming on January 15, the parties have a mere week to negotiate an agreement. Jonathan Gold, a vice president with the National Retail Federation who focuses on supply chain and trade matters, expressed concern that “they aren’t giving themselves much leeway.”
Trump has already voiced his support for the union. After a meeting with Harold Daggett at Mar-a-Lago in Palm Beach, Florida, he took to social media, arguing that further automation in ports would negatively affect workers. He stated, “The amount saved is nowhere near the distress and harm it causes for American workers, including our Longshoremen.” Trump also claimed to possess extensive knowledge regarding automation technology.
The implications of a potential strike are significant for the U.S. economy. Ports along the East and Gulf coasts handle over half of the nation’s container traffic, including vital goods ranging from smartphones to fresh produce and automobiles.
Mark Zandi, chief economist at Moody’s Analytics, noted, “A strike lasting less than a week may not meaningfully impact the broader economy due to generally sufficient inventories, which can prevent shortages… However, a prolonged strike could lead to disruptions and shortages, escalating economic costs from an estimated $500 million per day to over $2 billion per day if it extends past a month.”
When disruptions occur, the retail federation’s Gold indicated that supply chains typically need three to five days to bounce back following a one-day disturbance. “Exceeding five days can lead to serious complications,” he explained, highlighting a lengthy shutdown at West Coast ports in 2002, which required nearly six months to fully recover from.
Christina Boni from Moody’s Ratings underscored that an extended strike could negatively affect retail profitability, as delays in delivery could result in seasonal and fashion merchandise arriving after peak demand periods, leading to reduced sales and increased markdowns to clear merchandise.
Though the brief strike last fall had little impact on the economy and concluded before the holiday shipping rush began, companies are proactively preparing for the possibility of another disruption. Some are diverting shipments to the West Coast or Canada. The Danish container shipping giant Maersk recently advised its clients to collect loaded containers from ports before January 15 to minimize potential terminal disruptions.
In light of the impending strike, some shipping companies are implementing strike-related fees. For instance, the German transport firm Hapag-Lloyd has introduced a “work disruption surcharge” effective January 20, which will impose fees of $850 for 20-foot containers and $1,700 for 40-foot containers.
Under the current agreement with the Maritime Alliance, the highest-paid dockworkers earn $39 per hour, translating to an annual salary of $81,000. If the tentative deal reached in October is finalized, this top wage is set to exceed $60 per hour.
A report from the Waterfront Commission, which oversees New York Harbor, indicated that about a third of longshoremen working there earn $200,000 or more annually, factoring in overtime pay. This does not include the additional royalties workers receive for cargo movement through the ports, which can amount to thousands of dollars yearly.
There remains debate among experts regarding whether automation genuinely enhances operational efficiency at ports or disadvantages dockworkers. A study in 2023 by the Center for Innovation in Transport in Barcelona concluded that “there is no definitive evidence showing that automated terminals outperform traditional ones,” although they acknowledged that future technological advancements could potentially alter these findings.
