East Coast port workers on strike

By Trent Cotney, Adams and Reese.

The strike is likely to stop the flow of nearly all goods that customarily come through East Coast and Gulf Coast ports, including food, automobiles and building supplies.

On Tuesday morning, October 1, 2024, the International Longshoremen’s Association (ILA) went on strike following months of failed negotiations. This strike will impact container traffic spanning from Texas to Massachusetts, and it is expected to cost the U.S. economy as much as $5 billion each day.

Background of the strike

The ILA union represents approximately 45,000 port workers. Its labor contract with the United States Maritime Alliance (USMX) expired on Monday, September 30, as parties could not come to an agreement on issues related to pay and terminal automation projects.

Among the ILA’s demands was a 77 percent wage increase over a six-year contract, asserting that this pay hike would help balance out recent inflation. Union workers at the East Coast and Gulf Coast ports earn $39 an hour after being on the job for six years. That wage is markedly lower than unionized West Coast workers, who currently make $54.85 an hour and will see that rate grow to $60.85 in 2027. The USMX offered a pay increase, but it was not seen as acceptable.

In addition, the ILA demanded a complete ban on the automation of gates, cranes and container movements necessary for loading and unloading cargo. In response, the USMX offered to maintain requirements in the current contract to prohibit fully automated terminals and ban semi-automated equipment in a new labor contract. That offer was not sufficient. 
In June, the ILA halted negotiations with USMX, arguing that automated gates used for trucks to enter the ports violated the existing labor agreement. 

This strike is the first for the ILA since 1977, and it impacts ports that manage about one-half of U.S. ocean shipping.

Potential impact of the labor stoppage

The strike is likely to stop the flow of nearly all goods that customarily come through East Coast and Gulf Coast ports, including food, automobiles and building supplies. There may be shortages of raw materials, such as wood, copper and cotton, which will impact factories. 

President Biden had urged both parties to negotiate a resolution, and business groups warned that the strike could hurt businesses and consumers nationwide. If the strike is short, materials could be shifted to West Coast ports, but a longer strike could have huge implications and cost the economy billions.

Retailers rely on container shipping to maintain their inventory. In the days and weeks leading up to the strike, many major retailers worked to stock merchandise in hopes of avoiding disruptions for Halloween, Christmas and other holidays. However, smaller retailers do not have the flexibility and the financial capacity to stock up. 

Experts predict that the strike will hamper the critical flow of goods and lead to higher shipping costs. Such increased expenses will be passed on to consumers at a time when U.S. inflation is starting to normalize. They could also influence the Federal Reserve as it is finally starting to lower interest rates. 

Port activity touches many different types of businesses and includes workers in delivery and warehousing. So, in addition to the workers at the 14 ports involved in the strike, economists expect that some 100,000 workers will be temporarily sidelined until the dispute is resolved. 
It is expected that military cargo ships and the cruise industry will not be affected by the strike.
Advice for the Construction Industry

Manufacturers in various industries may see slow-downs in the delivery of goods. While much of the Southeast tries to recover from the devastation of Hurricane Helene, the lack of construction materials could be particularly challenging. 

Contractors are urged to check their inventories and contact their suppliers for key materials. We have to hope that the strike will be short, but if it is not, supply chain delays are inevitable. Work with your vendors and secure what you can. You may also need to negotiate with your customers and use substitutions as necessary.

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

About Trent Cotney

Trent Cotney is a partner and Construction Practice Group Leader at the law firm of Adams and Reese LLP and NRCA General Counsel. You can reach him at trent.cotney@arlaw.com or call 866.303.5868.