Strike at US seaports: Losses of up to 5 billion USD/day, threatening the economy

03/10/2024 14:45

Disagreement over salary increase

According to Bloomberg, the 36 striked ports have the capacity to handle up to half of the volume of U.S. imports and exports, and the closure of these ports has caused container and truck freight operations to be immediately paralyzed.

Energy and bulk goods will not be directly affected by the strike, while some exceptions will be allowed to operate, including the transportation of military goods and cruise ships.

Stevedoring workers strike at the Port of Newark, New Jersey on October 1, 2024. Photo: AFP

The severity of the shutdown of operations at major container ports from Houston to Miami and New York-New Jersey depends on the duration of the strike. The economic damage  from the closure of ports, which began at 12:01 a.m. ET on Oct. 1, will cost between $3.8 billion and $4.5 billion per day, according to JPMorgan Chase estimates.

Grace Zwemmer, an analyst at macroeconomic research firm Oxford Economics, warned that the shipping congestion caused by the week-long strike will take about a month to resolve.

Shares of two container shipping giants, Denmark's A.P. Moller-Maersk and Germany's Hapag-Lloyd AG, plunged in October after both rising more than 11% in September.

The International Cargo Handling Association (ILA) is seeking higher wages for workers and removing "automation language" in new contracts with maritime employers represented by the American Maritime Union (USMX). The old contract between the International Cargo Handling Association and the U.S. Maritime Union expired on the night of Sept. 30.

The president of the International Cargo Handling Association, Harold Daggett, has threatened to start the strike on October 1 and last for months if no agreement is reached before the deadline. The last time workers in East Coast and Gulf Coast ports went on strike was in 1977.

"We are prepared to fight for as long as we can, to strike for any length of time that is necessary," Daggett said on Facebook. The International Cargo Handling Association said the latest proposal from maritime employers "does not meet what ILA grassroots members are asking for in terms of wages and protections against automation".

Shipping lines and port operators, represented by the U.S. Maritime Union, have accused the International Cargo Handling Association of refusing to negotiate since the alliance canceled talks in June.

The White House was in contact with the two sides over the weekend and has made some progress on wages, according to Bloomberg.

However, US President Joe Biden stated that the dispute was due to a matter of collective bargaining and that he would not invoke his authority under national security law to order workers to return to port while negotiations continue.

A porter who spent six years at the port was earning $39 an hour at the end of a contract between the International Cargo Handling Association and the U.S. Maritime Union. The International Freight Forwarders Association has proposed a $5 per hour wage increase per year on a new six-year contract, equivalent to a nearly 80% increase over the contract that just expired, according to a person familiar with the matter told Bloomberg.

Meanwhile, the U.S. Maritime Union initially proposed a $2.50 per hour per year wage increase for the new contract, which is a nearly 40% increase.

But after being summoned to the White House on Sept. 27 and Sept. 30, employers said they had made a new offer to the U.S. Maritime Union, which included a nearly 50 percent increase in loading and unloading wages over the term of the contract, along with additional health care and retirement benefits.

However, this proposal was rejected by the International Cargo Handling Association.

Trading, transportation and retail companies have urged the White House to intervene to limit the damage from the strike. Container carriers are preparing to collect surcharges related to seaport disruptions, increasing the total cost of transportation.

Causing US GDP to lose up to 5 billion USD/day

"It would be heartless to allow a contract dispute to cause such a shock to our economy," Suzanne Clark, executive director of the American Chamber of Commerce, wrote in a letter to President Biden on October 1.

"The Taft–Hartley (Labor Relations Act of 1947 – BTV) will give both parties time to negotiate to reach an agreement on a new employment contract," Clark wrote, referring to the provision that allows the U.S. president to intervene in labor disputes related to national security under the Taft–Hartley Act.

According to estimates from the National Association of Manufacturing Manufacturers (NAM), the strike costs $2.1 billion in trade transactions per day, and the total economic loss of US GDP could be dragged down to $5 billion per day.

Jay Timmons, president and CEO of the National Association of Manufactured Manufacturers, has called on President Biden to take action to resume operations at ports while negotiations must continue.

"The president can protect producers and consumers by exercising his authority and we expect him to act quickly," Timmons said.

In contrast, the International Brotherhood of Teamsters on October 1 called on the Biden administration to stay away from the dispute. Similarly, the president of the International Loading and Unloading Association also asked the White House not to interfere in the agreement, and affirmed that if forced to return to work at the port, loading and unloading workers will handle fewer containers than usual, slowing down the process of processing work.

Fearing disruptions to ports on the East Coast and Gulf Coast, shippers and 

carriers have urged cargo ships to dock early or divert through West Coast ports to mitigate risks and stock up on inventory.

"The most important thing is that carriers, shippers and workers come to an agreement," U.S. Transportation Secretary Pete Buttigieg said on Bloomberg television. "There's really no substitute for seaports being put into operation," Buttigieg noted.

Source: baodautu.vn