Port Poker And The East Coast Dock Strike
Union Negotiations and the Impact on the Economy
A saying goes, "The sweetest words are, 'Here is your end' (of the bargain)." This is especially true in union negotiations, where every player has a stake. This is evident in the ongoing bargaining between port employers and union dockworkers at three dozen ports on the U.S. East and Gulf coasts. This negotiation has attracted the attention of the White House.
Unlike contract negotiations in sports, which are usually under the media's scrutiny, longshore contracts are notoriously confidential. The occasional news releases only manage to obscure the actual drama that threatens to disrupt a significant portion of the U.S. and global goods economy.
The Current State of Negotiations
The current round of bargaining between port employers represented by the United States Maritime Alliance and the International Longshoremen’s Association (ILA) has been tense. The ILA, which represents 25,000 workers in container and ro-ro services at ports from Maine to Texas, halted talks in June. The union has since refused to return to negotiations, escalating the situation by calling for "war" against employers and asserting that "the docks belong to us."
Economic Indicators and Labor Peace
Unions traditionally benefit when the economy is doing well. With the GDP growing at an annual rate of 3% in the third quarter of this year, and inflation cooling to 2.5% in August, things are looking up. This positive economic climate has led to several high-profile companies settling with their unions. Despite some exceptions, there is mostly labor peace.
The East Coast Longshore Labor Dispute
The COVID-19 pandemic highlighted the importance of container ports in the U.S. supply chain. Disruptions at these ports have a ripple effect throughout the economy, and it takes considerably longer to restart the flow of goods than it does to stop it. Union contract negotiations play a crucial role in maintaining the efficient handling of incoming containers at these ports.
The Impact of Elections on Labor Disputes
The upcoming elections add another layer of complexity to the situation. President Joe Biden has been supportive of unions, even walking with auto plant employees on their picket line. However, a group of importers, manufacturers, trade groups, and House Republicans have tried to pressure Biden to block an Oct. 1 strike by the ILA.
Other Stakeholders in the Negotiations
Various state and federal bodies also have a stake in these negotiations. U.S. Customs and Border Protection, local governments, and port authorities all claim their share of duties, taxes, and tariffs. Over the past 20 years, port authorities have been competing to expand their container handling capacity, leading to an infrastructure arms race.
The Role of Automation in U.S. Ports
Preserving jobs by keeping automation technology out of U.S. ports is a high priority for ILA leadership. However, this has led to U.S. ports struggling to keep pace with ports in Asia and Europe, where advanced automation is used to improve efficiency.
The Impact on Consumers
Ultimately, consumers are the ones who bear the brunt of disruptions, delays, and other supply-chain issues. These problems are reflected in the price of imported goods.
Bottom Line
Eventually, the ILA will secure its contract, and containers will flow again, ensuring labor peace for at least six years. However, the impact of these negotiations on the economy, the role of automation in U.S. ports, and the burden on consumers raises important questions. What are your thoughts on this issue? Share this article with your friends and sign up for the Daily Briefing, which is every day at 6 pm.
