by Lloyd's List

18 September 2024 (Lloyd's List) - “A SLEEPING giant is ready to roar,” International Longshoremen’s Association president Harold Daggett dramatically proclaimed on Tuesday.

The ILA, which represents dockworkers at US east and Gulf coast ports, warned that “a strike at all ILA ports…at 12:01 am on October 1 seems more likely”.

Also on Tuesday, a coalition of 177 trade associations representing all facets of US business lobbied the Biden administration “to immediately work with both parties to resume contract negotiations and ensure there is no disruption”.

The dilemma for the Biden administration: The ILA has refused to allow the administration’s involvement in talks.

The Biden administration played a role in last year’s final negotiations between terminal employers and the International Longshore and Warehouse Union on the west coast. But in the case of the east and Gulf coast contract, the union is blocking federal government participation.

“We [are not] interested in any help from outside agencies to interfere in our negotiations with USMX [US Maritime Alliance, the terminal employers]. This includes the Biden administration and the Department of Labor,” Daggett said in a statement on July 12.

Daggett said in another statement in July that he has had a “long relationship with Donald Trump going back decades in New York City”.

The letter to Biden on Tuesday was signed by US trade associations representing sectors from retail to agriculture, customs brokers, forwarders, chemical distributors, forest products, manufacturers, restaurants and miners.

USMX said Tuesday that it is “in strong agreement with the 177 trade associations who are calling for the immediate resumption of negotiations with the ILA. It is disappointing that we have reached this point where the ILA is unwilling to reopen dialogue unless all of its demands are met. We call on the ILA to return to bargaining so we can reach a new deal before the expiration of our current agreement, something we continue to believe is possible if the other side is willing to meet.”

The trade associations warned that “a strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend”.

“The only way to resolve these issues is for the parties to come back to the bargaining table and actually negotiate the new contract. The administration needs to provide any and all support to the parties in their negotiations.”

Will Biden administration intervene?

Importantly, the trade associations also said that “the administration needs to be ready to step in if a strike or other action occurs that leads to a coastwise shutdown or disruption”.

This statement implies that the Biden administration should invoke the Taft-Hartley Act to force an 80-day cooling-off period and temporarily halt the strike if the ILA stops work.

Articles by Reuters published Tuesday and by the New York Times published September 2 cited unnamed Biden administration officials who stated that the administration is not considering invoking Taft-Hartley for the threatened strike at east and Gulf coast ports.

However, a pro-labour administration would not preemptively confirm on the record that it would invoke Taft-Hartley. The more important question is whether it could do so politically if and when a strike occured, given that the work stoppage would be one month before a presidential election in which Democratic nominee Kamala Harris needs the labour vote.

As the Retail Industry Leaders Association opined on the strike risk earlier this month, “Any decision to invoke Taft-Hartley would likely weigh the potential political ramifications, particularly given the proximity of the election. Both the Harris and Trump campaigns are focusing on securing union votes, which will likely influence the outcome. The decision will ultimately hinge on balancing the national economy against union interests.”

Carriers starting to prepare

Meanwhile, shipping lines are starting to prepare customers for potential disruptions.

Hapag-Lloyd told customers Tuesday that “all shipping services at the affected ports would likely experience delays or disruptions, impacting both import and export cargo movements”.

Loaded import boxes at the terminals would not be retrievable. “In the event of a strike, cargo left on the terminal at the affected ports will not be accessible,” warned Hapag-Lloyd.

There are few options to reroute shipments to other ports, it added. “Providing alternative routing is challenging due to the anticipated scope of the disruption.” 

Prices would increase, according to Hapag-Lloyd. “Shipping costs, including freight, warehousing, and drayage rates, are expected to rise due to increased demand for alternative routes and port services. Emergency surcharges may also be applied to account for additional handling and congestion.”