An East Coast port strike looms for the first time since 1977. Here’s what to know.

Thousands of dock workers in every specialty East and Gulf Coast port They are preparing to strike starting early next week, threatening to shut down trade gateways that handle about half of all goods shipped in containers in and out of the United States.

Negotiations between the union representing dockworkers and the shipping industry group representing terminal operators and shipping companies have been stalled for months, with the two sides this week issuing conflicting statements about their willingness to negotiate.

The US Maritime Alliance (USMX) has filed an unfair labor practice filing with the National Labor Relations Board requesting “immediate injunctive relief — requiring the union to resume negotiating — so we can negotiate a deal,” the United States Maritime Alliance (USMX) said Thursday.

The NLRB confirmed that it received an unfair labor practice charge, which is filed at its regional office in Newark, New Jersey. The charge will appear on the agency’s website in the next few days, after which the investigation will begin.

The USMX’s appeal to the NLRB was derided as “yet another publicity stunt” by the International Longshoremen’s Association (ILA). “Foreign-owned companies, represented by USMX, have set up shop in U.S. ports, earned billions of dollars in revenue and profits, taken those profits offshore, and failed to adequately compensate their shore-based workforce for their labor engaged in real work.” “An unfair labor practice,” the union said in a statement Published Thursday.

Experts Say closure It can severely hinder the flow of goods and raise shipping costs. Any rise in such expenses could be passed on to consumers once U.S. inflation returns to normal, and would even potentially hamstring the Fed as it finally turns to inflation. Reducing interest rates.

Here’s what to know about the labor struggle, which would be the first mass work stoppage at Eastern ports in nearly half a century.

What are the basic issues in a labor dispute?

The dispute involves a contract covering tens of thousands threatening to strike at ports from Massachusetts to Texas if a new labor agreement is not reached with the USMX before the current contract expires at midnight on September 30. The strike will be the first dock on the East Coast to strike since 1977

A total of 14 ports with about 25,000 workers could be affected by the strike, according to USMX: Baltimore; Boston; Charleston, South Carolina; Jacksonville, Florida; Miami; Houston; Mobile, Alabama; New Orleans. New York/New Jersey; Norfolk, Virginia; Philadelphia; Savannah, Georgia; Tampa, Florida; And Wilmington, Delaware.

But because economic activity at ports touches a range of businesses, such as warehousing and transportation, the fallout from the work stoppage could see more than 100,000 employees temporarily out of work, according to economists.

Unionized workers at East Coast and Gulf Coast ports earn a base wage of $39 an hour after six years on the job. That’s far less than their unionized peers on the West Coast, who earn $54.85 an hour — a rate that will rise to $60.85 in 2027, excluding overtime and benefits.

Assuming a 40-hour workweek, dock workers on the West Coast earn more than $116,000 annually, compared to $81,000 for their counterparts in the East. The ILA’s initial demands included a 77% wage increase over a six-year contract, with the labor group claiming the wage increase would offset rising US inflation in recent years.

USMX in August offered what it called an “industry-leading” pay increase, but the two sides remain far apart.

“Mark my words, we will close them on October 1 if we don’t get the kind of wages we deserve,” Harold Daggett, president of the Israel Land Association, said earlier this month.

However, the differences are not only related to wages. To protect job security, the Israel Lands Administration calls for a complete ban on the automation of cranes, gates and container movements used to load or unload goods.

The maritime alliance said it had offered to maintain provisions in the existing contract banning fully automated terminals, while also prohibiting the use of semi-automated equipment in the new labor agreement.

Unable to bridge the gap, the International Law Association in June suspended negotiations with the USMX, Saying Using automated gates to allow trucks to enter ports without ILA workers violates the existing labor agreement.

What impact can a strike have?

Ports that could close in the event of a strike handle more than 68% of total U.S. container exports and about 56% of container imports, according to industry data. So even a short strike would cause major disruptions to regional trade flows.

A strike would reduce US economic activity by between $4.5 billion and $7.5 billion for each week it lasts, according to analysts at Oxford Economics. The investment research firm estimates that it will take up to a month to clear the backlog of cargo that is building up while the ports remain closed.

Although West Coast terminals can handle some freight transferred from eastern ports, they can’t handle it all, and neither can the American rail system, experts say.

If the strike lasts longer than a month or so, some companies may face shortages of parts and other inputs. Much of the raw materials that go into a range of products flow through East and Gulf Coast ports, such as cotton, lumber and copper. The automobile and pharmaceutical industries, which maintain lean inventories, could be affected, while port closures in Miami and Norfolk could impact tobacco companies.

In addition, a strike could disrupt shipments of products such as bananas, manufacturing components and plywood, halting the flow of consumer goods and industrial parts to factories. Fresh meat and other refrigerated foods can spoil, leading to shortages and higher prices.

“I think everyone is a little nervous about this,” said Mia Ginter, director of North American ocean freight for CH Robinson, a logistics company. “The rhetoric this time with the Israel Lands Administration has reached a level we have never seen before.”

The labor dispute also comes at a time when the Federal Reserve is closely monitoring the labor market for signs of weakness.

“In principle, the Fed should consider any temporary weakness, but it may be difficult to separate the noise from the signal. Therefore, a strike would increase the odds of another 50 basis point cut in November,” says Grace Zwemer. , Assistant American Economist. Oxford Economics wrote in a research note on Thursday.

How do companies prepare?

By contrast, consumers probably won’t notice a shortage of store merchandise during the holiday shopping season, as most products are already in warehouses after being moved forward.

The strike doesn’t mean “Santa’s not coming,” said Jonathan Chappell, senior managing director of transportation at Evercore ISI, an investment research firm.

Imports into U.S. ports are 10% ahead of a year ago, indicating that some goods were being shipped in anticipation of the strike, according to Ben Nolan, a transportation analyst at investment bank Stifel.

“Many retailers have already taken steps to mitigate the potential impact of a strike by bringing in products early or moving products to the West Coast,” said Jonathan Gould, vice president of supply chain and customs policy at the National Retail Federation.

However, given the complexity and interconnectedness of global supply chains, “even a minor interruption will have a negative impact and cause delays at a critical time for both retailers and consumers.”

The ILA said Wednesday that its members will continue to handle all military cargo in the event of a strike, and will also continue to work on passenger cruise ships so as not to inconvenience “the tens of thousands of Americans who have booked trips in advance.”

Can there be a political solution?

If the strike is deemed to threaten national health or safety, in accordance with… Taft-Hartley law President Joe Biden could seek a court order for an 80-day cooling-off period.

Although a Biden administration official told CBS News that the US Department of Labor is monitoring the situation and has been in contact with both sides, there are currently no plans to participate in the talks.

“We have never used Taft-Hartley to break a strike and are not considering doing so now,” the White House told CBS News.

By contrast, the Biden administration has intervened in recent years to resolve potentially devastating labor disputes.

In 2022, Biden and Congress intervened to prevent a rail strike, with the president signing legislation drafted by lawmakers to impose a tentative agreement on dozens of unions representing 115,000 workers. In 2023, acting Labor Secretary Julie Su played a key role in brokering a deal to avert a strike and broker a new labor deal for West Coast dockworkers.

The union’s influence has also become stronger ahead of the presidential election as candidates compete for workers’ votes, and with visions of clogged ports and product shortages during the pandemic still on voters’ minds.

“If there’s ever a time when workers can get what they want, it’s now,” said Stifel’s Nolan.

Some observers believe that when push comes to shove, Biden will act to prevent a withdrawal.

The US government is unlikely to intervene as quickly as Canada did in a labor dispute that brought the country’s railways to a standstill last month, when… The Canadian government ordered Oxford Economics’ Zwemer noted that the railways will enter into binding arbitration in less than a day.

She added, “But if the strike continues for several weeks, the chances of the government participating in the negotiations will rise, especially with the presidential elections quickly approaching.”

“A potential strike on East Coast and Gulf ports is unlikely to cause any major economic disruption because we strongly suspect that, with the election looming and despite earlier denials, President Biden will have no choice but to intervene and call for a rollback.” “Labor legislation,” analysts at Capital Economics wrote.

She contributed to this report.