Agreement Includes a 62% Wage Increase Over Six Years, Ending Largest Port Work Stoppage in Nearly 50 Years While Addressing Key Issues on Automation and Supply Chain Recovery.
A tentative agreement has been reached to end a three-day strike that disrupted shipping operations on the U.S. East Coast and Gulf Coast, according to statements released by the involved parties on Thursday. The strike, which halted unloading at ports from Maine to Texas, was initiated by dock workers represented by the International Longshoremen’s Association (ILA) over a wage dispute and issues related to automation.
The proposed deal outlines a wage increase of approximately 62% over six years, as disclosed by two sources familiar with the matter, including an ILA worker who participated in the picket line. This would mean an increase in hourly wages from the current $39 to about $63 over the duration of the contract. However, the union’s initial demand was for a 77% wage hike, while the United States Maritime Alliance (USMX), representing port operators, previously offered a raise close to 50%. Despite the discrepancy, the tentative agreement marks a significant step toward resolving the largest labor stoppage of its kind in nearly 50 years.
According to the ILA and port operators, the existing master contract will be extended until January 15, 2025, to allow both parties to return to the negotiating table and address unresolved matters. “Effective immediately, all current job actions will cease and all work covered by the Master Contract will resume,” the statement read.
One of the most contentious issues yet to be fully resolved is automation in the ports, which dockworkers fear could lead to significant job losses. Union leader Harold Daggett has previously emphasized that employers, including major container ship operator Maersk and its subsidiary APM Terminals North America, have not met the union’s demands to halt automation projects.
The Biden administration played a notable role in facilitating the tentative deal. President Joe Biden highlighted the importance of the agreement, stating it represents “critical progress towards a strong contract,” and asserting that “Collective bargaining works.” Biden’s administration had openly supported the union’s position, pressuring port employers to improve their offer amidst reports of the shipping industry’s substantial profits since the onset of the COVID-19 pandemic. The White House refrained from invoking federal powers to halt the strike, despite appeals from business associations and Republican lawmakers, to maintain Democratic support among unions, especially ahead of the upcoming presidential election.
The strike, involving roughly 45,000 port workers, was launched on Tuesday after negotiations for a new six-year contract broke down. The work stoppage led to a backlog of anchored container ships, with at least 45 vessels unable to dock and unload as of Wednesday, a significant increase from the three ships anchored prior to the strike’s commencement on Sunday, according to data from Everstream Analytics. The closure of 36 ports, including major hubs in New York, Baltimore, and Houston, affected a variety of containerized goods and had the potential to lead to shortages of commodities ranging from produce to automotive components.
As reported by Reuters, the White House engaged closely in negotiations to resolve the strike and accelerate the reopening of ports, which was particularly urgent in the aftermath of a deadly hurricane that had ravaged southeastern states, causing supply shortages.
On Thursday morning, White House Chief of Staff Jeff Zients convened a virtual meeting with ocean carrier CEOs, emphasizing the need to resume port operations to aid hurricane recovery. By midday, following additional pressure from top economic adviser Lael Brainard and Acting Secretary of Labor Julie Su, shippers had agreed to put forth an improved offer, which was pivotal in extending the contract and bringing both parties back to the negotiating table.
The resolution of the strike has been welcomed by various industry groups. The National Retail Federation remarked that ending the work stoppage is “good news for the nation’s economy,” while the National Association of Manufacturers praised the outcome, calling it “a victory for all parties involved – preserving jobs, safeguarding supply chains, and preventing further economic disruptions.” Economists had warned that while accelerated shipments in recent months mitigated the immediate impact on consumer prices, a prolonged strike could have eventually caused price hikes, with food costs likely being the first to react.
Financial assessments by JP Morgan analysts estimated the economic cost of the strike at around $5 billion per day. Although a final contract has not yet been agreed upon, the tentative deal and the commitment to continued negotiations provide a significant step toward stabilizing the port operations and ensuring the smooth flow of goods across the U.S. East Coast and Gulf Coast.
