Shipping Groups Decline as Port Workers from Maine to Texas Strike

Shares in shipping companies experienced a significant decline on Tuesday after dockworkers along the US East Coast and Gulf Coast initiated a strike, advocating for improved wages and protections against automation.

This strike marks the first major labor action by dockworkers in nearly 50 years and poses a threat to the flow of approximately 50% of American shipping operations. Shipments of various goods, including food and automobiles, have been disrupted across ports from Maine in the Northeast to Texas in the South.

Analysts have raised concerns that the strike could not only jeopardize jobs but also result in losses amounting to billions of dollars for the economy each day, potentially reviving inflationary pressures that had been diminishing.

The walkout follows unsuccessful negotiations between the International Longshoremen’s Association (ILA), which represents about 45,000 dockworkers, and the United States Marine Alliance (USMX), the employer organization. The ILA was seeking a revised six-year contract before a deadline that passed at midnight on September 30.

The ILA rejected the final offer from USMX presented on Monday, claiming it fell short of meeting the expectations of its members. According to USMX, it had proposed a nearly 50% pay increase, which was an improvement over prior offers.

“We are prepared to fight as long as necessary, to stay out on strike for whatever period it takes, to secure the wages and protections against automation that our ILA members deserve,” stated ILA leader Harold Daggett.

Following the commencement of the strike, shares in Denmark’s AP Moeller – Maersk saw a 5% drop during European trading. The ILA indicated that Maersk and its APM Terminals North America unit were among those employers that had not provided adequate pay increases or agreed to stop automation projects at the ports.

Additionally, shares of Hapag Lloyd in Germany fell by 4%, while US-listed shares of ZIM Integrated Shipping experienced a dip in premarket trading.