As port workers on the East Coast and Gulf Coast threaten to strike on Oct. 1, companies are speeding up imports, redirecting cargo and pleading with the Biden administration to stop the strikes.
Some importers have started placing orders four months earlier than usual to get Christmas goods to ports before a labor contract between port terminal operators and the International Longshoremen’s Union expires next Monday.
Much of the cargo has been diverted to West Coast ports, where longshore workers belong to a different union that agreed to new contracts last year. The ports of Long Beach and Los Angeles have said they are handling as many containers in 2021-22 as they did during the pandemic shipping boom.
Despite these measures, and all the problem-solving skills supply chain managers have developed during recent turmoil, even a short strike could wreak major disruption. Transportation analysts at JPMorgan estimate that the strike costs the economy $5 billion a day, or about 6 percent of daily gross domestic product. For every day the ports are closed, it takes about six days to clear the backlog, the analysts say.
Chris Butler, chief executive of the National Tree Company, which sells artificial Christmas trees and other decorations, said his company imported goods earlier and used more West Coast ports, but he estimated 15% of its goods were still held up because of the port strike.
“It’s very unfortunate,” said Butler, who is based in northern New Jersey. “We’re doing everything we can to mitigate the damage, but there’s only so much we can do if we’re at the mercy of the port.”
More than half of imported apparel, footwear and accessories pass through East Coast ports, according to Steven Lamar, president of the American Apparel and Footwear Association. The industry has made significant preparations for a strike, but “when it comes to logistics, you should never be surprised if there’s a last-minute bottleneck,” he said.
A number of industry groups wrote to the Biden administration last week urging it to help forge an agreement between the American Maritime Alliance, a group of companies that move cargo through the port, and the ILA.
The coalition said Monday it had been unable to schedule a meeting with the ILA, adding that it had been contacted by the Federal Conciliation and Mediation Service, a government agency that helps management and unions negotiate labor contracts.
In a statement on Monday, the union disputed the notion that it was refusing to negotiate and argued the wage increases offered by the alliance were unacceptably low.
There have been no strikes across Eastern and Gulf Coast ports since 1977, when some retailers staged a walkout before the holidays.
Administration officials have said Biden has no plans to force longshore workers to return to work, something the president is allowed to do under the Taft-Hartley Act of 1947. Beth Looney, head of the Port Authority of New York and New Jersey, said last week that invoking the law would be “the next best scenario after reconciliation.”
A strike would shut down giant container ports in New Jersey, Virginia, Georgia and Texas, including the Port of Baltimore, a major hub for the import and export of vehicles and heavy machinery that fully reopened in June after a container ship collided with the Francis Scott Key Bridge in March. Significant food trade passes through ports on the Eastern and Gulf Coasts, including the majority of orange juice imports that go through a facility in Newark. Cruise ship facilities would likely remain open, officials said.
The ILA and the Maritime Alliance, which has more than 47,000 members, have not met in person since June, when unions called off talks after alleging unauthorized use of labor-saving technology at the port of Mobile, Alabama. Unions also want wage increases that have been decimated by high inflation over the past few years.
Eastern and Gulf Coast longshoremen with six or more years of experience currently earn $39 an hour, up 11 percent since the start of their expiring six-year contracts, compared with 24 percent inflation over the same period.
Neither the union nor management have made public their wage proposals, but the Journal of Commerce recently reported that the union is seeking a $5 hourly raise for each year of the six-year life of the contract, while management is proposing a $2.50 hourly raise each year.
“Our ILA members will not accept this ridiculous and insulting offer, given the work ILA dockworkers do and the billions of dollars their labor earns companies,” union President Harold J. Daggett said in a statement Monday.
The ILA declined to respond to emailed questions, and the coalition also declined to comment.
Because most cargo coming in and out of the United States passes through seaports, the two main longshore unions have great influence and have used that influence for years to secure wage increases and, in some ports, big pensions and other benefits.
Longshoremen on the West Coast earned an average of nearly $220,000 last year and now make about $55 an hour, according to management. At the Port of New York and New Jersey, about 60% of longshoremen earned between $100,000 and $200,000 in the 12 months ending in June 2020, the most recent data available, according to data from the agency that helps oversee the port.
About three-fifths of container traffic into the U.S. routes through the East Coast and Gulf Coast, and logistics experts say West Coast ports would not be able to accommodate all or even most of it if traffic was diverted elsewhere.
Container volumes are surging on the West Coast, with the Port of Long Beach reporting its best month on record in August, with container imports up 40 percent from a year ago.
The risk is that as more shippers use West Coast ports, they could become congested, causing delays and significantly higher freight rates.
Noel Hasegaba, chief operating officer for the Port of Long Beach, said in an interview that the recent surge in cargo was handled “without any of the backlogs, delays or congestion” the port experienced in 2021 and 2022. The port was operating at 73% of capacity and nearby warehouses were not full, he said.
But the time containers spend waiting at ports before being picked up by trucks or trains has increased recently, according to the Pacific Merchant Shipping Association, which represents port terminal operators on the West Coast. Wait times now average four to eight days, Hasegaba said. “That’s a very good thing, given the number of containers we’re handling,” he said.
Longshoremen on the West Coast, represented by the International Longshore and Warehouse Union, have agreed to allow terminal operators to use automated technology that could help the Port of Long Beach handle a recent surge in traffic.
The Long Beach Container Terminal, considered the most automated port terminal in the United States with driverless vehicles and other equipment, has achieved average annual growth rates far outpacing other terminals in the port in recent years, according to data obtained by The New York Times through a public records request.
Industry analysts also said there is still excess truck and rail capacity to move containers out of West Coast ports and ship them around the country.
But doing so can be cost-prohibitive: Shipping a container of artificial Christmas trees from the West Coast to the East Coast can cost as much as $6,000, said Butler of the National Tree Company. “That’s just too expensive,” he said, adding that while shipping by rail would be a little cheaper, delivery times are uncertain and he didn’t want to take that risk.
