US Labor Department Engages with Employer Group Amid Potential Port Strike, By Reuters

By Abhinav Parmar and Lisa Baertlein

The U.S. Department of Labor has reached out to the United States Maritime Alliance in light of a potential National Longshoremen’s Association (ILA) strike on the East Coast and Gulf of Mexico, scheduled for October 1. This was confirmed by the employer group on Monday.

The Department of Labor’s involvement indicates that the Biden administration may be looking to facilitate negotiations before the current contract, which covers 45,000 workers at approximately 36 ports, expires at midnight on September 30.

According to TD Cowen analyst Jason Seidl, the possibility of an ILA strike is increasing as negotiations become more contentious, though any strike is not likely to last long. Such work stoppages would occur shortly before the U.S. presidential election on November 5.

The USMX employer group expressed its willingness to engage with the Federal Mediation & Conciliation Service to assist in contract negotiations, assuming both parties agree to mediation. However, USMX stated it has not been able to arrange a meeting with the ILA to continue discussions on a new Master Contract.

In response, the ILA stated they have communicated with USMX several times in recent weeks. The union emphasized that the ongoing stalemate in Master Contract negotiations is due to USMX’s "unacceptable" wage increase proposal for longshore workers.

A potential strike could affect ports from Maine to Texas, which handle about half of U.S. imports, including major facilities in cities like New York/New Jersey, Houston, and Savannah, Georgia. Any ILA action would primarily disrupt labor-intensive container shipments but would have minimal impact on critical oil and gas shipments.

In August, the five largest East and Gulf Coast ports collectively handled 49,532 twenty-foot equivalent units (TEUs) of cargo valued at approximately $2.7 billion, as noted by John McCown, a senior fellow at the Center for Maritime Strategy.

Cargo delays resulting from work disruptions would likely ripple through U.S. and global supply chains, causing goods to be stranded and prices to increase.

Echoing concerns from industry groups representing retailers, manufacturers, and farmers, last week, 69 Republicans from the U.S. House of Representatives urged the Biden Administration to take all necessary measures to avert a port work stoppage, warning of "dire impacts" on supply chains, the economy, and American consumers.

President Biden recently stated that he does not plan to use the Taft-Hartley Act to prevent a port strike. However, he previously sent Acting Labor Secretary Julie Su to negotiate a significant contract between West Coast seaport employers and union workers last summer, which followed labor disruptions at California ports. That contract included a 32% pay increase, which is expected to set a precedent for negotiations on the East and Gulf Coasts.