Clear skies and smooth seas may be about to turn turbulent for global shipping giants. After raking in $317B in operating profits from 2021 to 2023, workers are demanding a bigger piece of the pie. This could lead to 2024’s most costly labor dispute — and it’s looking like there may be no quick fix in sight.

The ship is sinking: Negotiations between the International Longshoremen’s Association (ILA) and the US Maritime Alliance (USMX) — a trade group representing global shipping companies — came to a halt yesterday, as 50K union workers walked off the job, leaving at least 14 ports across the East and Gulf coast unstaffed at the start of the fourth quarter. With the holiday season approaching fast, the ILA is looking to use its leverage to negotiate aggressive pay raises after inflation wiped out previous gains.

• Under the contract (which just expired), ILA members earned up to $39 per hour. For their next six-year contract, the ILA reportedly demands a 77% increase (~$5 more per hour each year), pushing top pay to $69 per hour by 2027.
• However, the USMX has only offered a 40% pay raise — a rate that ILA international president and chief negotiator Harold Daggett called “insulting” given the “billion-dollar profits” made by USMX members.

No End In Sight?

Historically, political leaders have intervened to stop strikes by rail and port workers, but with the election just over a month away, President Joe Biden has indicated that he will not force the ILA and USMX back to the table. This standoff could drag on for a while, with high costs for businesses.

• According to Anderson Economic Group, a one-week strike could cost the US economy over $2B, largely due to perishable goods, lost income for transit companies, and wages.
• The University of Houston’s Margaret Kidd warns ABC7NY that if this strike lasts as long as the 45-day strike in 1977, it could “back up port operations across the country into 2025.”

What’s the impact? Without intervention, the ILA stands a strong chance of freezing out the USMX — adding to successful union drives by the United Automobile Workers), Teamsters, and others. A victory for the ILA would also bring their wages back in line with their West Coast counterparts, who currently earn slightly more. In the meantime, analysts are warning that delays in holiday shipping are likely — and in the worst case, shortages of produce, alcohol, and other goods could lead to a slight increase in inflation.