Workers at docks along the US East and Gulf Coasts have begun a strike this week in a move that could, by some estimates, cost the US economy $5 billion (A$7.25 billion) a day.
Tens of thousands of workers at ports from Maine to Texas have walked off the job as members of the International Longshoremen’s Association (ILA) union representing the workers failed to reach an agreement with US Maritime Alliance, known as USMX, which represents shipping firms, marine terminal operators and port associations.
On Monday, USMX said it would raise wages by almost 50 per cent, triple employers’ contributions to pension plans and strengthen health care options too.
However, union boss Harold Daggett called for significant pay increases for his members, while voicing concerns about threats from automation.
“We’re going to fight for it and we’re going to win or this port will never open up again. I’m not playing games here,” said Daggett, according to the BBC.
The strike is the first action at this scale in nearly 50 years (the last time that East Coast Gulf Coast workers went on strike was in 1977) and has resulted in calls by the U.S. Chamber of Commerce for President Joe Biden to intervene and possibly invoke the 1947 Taft-Hartley Act to force the workers to stop striking.
But with the country’s election day just over a month away, the President is mindful of the risks of taking a tough stance against labour unions.
Republican presidential candidate Donald Trump has already backed the striking port workers. “American workers should be able to negotiate for better wages, especially since the shipping companies are mostly foreign flag vessels”, he said in a statement.
Walmart and Costco in the US are already diverting shipments to the West Coast to avoid disruption.
Analysts say that it would take a week to clear the backlog of every day the strike goes on.
What immediate impact could the strike have on the US’s economy? Daggett explains how he sees the consequences of it play out for the American market. “First week, [we’ll] be all over the news every night,” he said. “Second week, guys who sell cars can’t sell cars because the cars aren’t coming in off the ships. They get laid off. Third week, malls are closing down. They can’t get the goods from China. They can’t sell clothes. Everything in the United States comes on a ship.”
With shipping at those ports coming to a halt, the spillover effect to Australia is inevitable if it continues over a couple of weeks.
Tom Jensen, the head of international freight and logistics for the Freight & Trade Alliance represents 500 Australian companies involved in freight forwarding, the customs broking community, import and export.
“Australia does about 5-10 per cent of our trade with the US. It’s our second-largest trading partner outside of China,” said Jensen, according to ABC News.
“So the impacts will be quite severe, but not so severe as somebody like China going on strike, for instance.”
The global shipping industry has absorbed several blows over the last few years. Houthi rebels have continued to target ships in the Red Sea, and the Evergreen getting stuck in the Suez Canal in 2021 showed how an incident like that which lasted for a week disrupted global supply chains for up to six months after that.
A protracted disruption at US ports could, eventually, drive up the cost of goods in Australia of items manufactured in the US as demand from Australian consumers increases over the coming holiday season which is typically the busiest period for retailers.
