The ongoing strike by dockworkers on the U.S. East Coast has brought maritime trade to a standstill, leaving many to wonder: why hasn’t a resolution been reached? While it appears counterintuitive, several factors incentivize both the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) to prolong the strike.

Why the Strike Drags On

Carriers Capitalizing on Chaos: While the strike disrupts the supply chain, it also presents opportunities for ocean carriers. Reduced cargo capacity leads to higher freight rates, potentially boosting profits. Moreover, the strike allows carriers to clear pandemic-era backlogs and even create new ones, justifying extended congestion surcharges.

ILA’s Fight for the Future: The ILA seeks significant wage increases, citing inflation and record industry profits. However, their fight goes beyond just pay. The union aims to secure job protection by resisting automation, a key concern for dockworkers fearing displacement by technology.  Control over container royalties is another point of contention, with the ILA demanding 100% of these funds to supplement worker wages.

USMX Playing the Long Game? The USMX has offered substantial wage increases and improved benefits, but remains firm against the ILA’s demands on automation and container royalties. While publicly expressing a willingness to negotiate, the USMX might be strategically using the strike to push back against the union’s demands and potentially set a precedent for future negotiations.

The Core Issues

Wages: The ILA demands a 77% raise over six years, while the USMX offers nearly 50%. Discrepancies arise in how each side calculates the increase, with the ILA arguing the USMX’s figure ignores lower-wage earners.

Automation:  The ILA seeks a complete ban on automation to protect jobs, while the USMX’s stance remains ambiguous, though they claim to be open to addressing concerns.

Container Royalties: The ILA demands full control of these wage supplements, opposing any sharing with employers.

Economic and Political Fallout

The strike’s economic impact is substantial, potentially costing the U.S. economy billions daily. With East and Gulf Coast ports handling a majority of U.S. container traffic, delays ripple through the supply chain, impacting consumers with potential shortages and price hikes.  The strike’s timing during peak retail and harvest seasons further exacerbates these issues.

Politically, the Biden administration faces a delicate balancing act. While expressing support for fair wages and workers’ rights, the administration must also mitigate the economic damage caused by the prolonged strike.

The Path Forward

The strike’s end remains uncertain, with both sides entrenched in their positions.  Increased pressure from the Biden administration or significant public outcry might force concessions.  However, until either the ILA or the USMX  demonstrates a willingness to compromise on key issues, the stalemate is likely to persist.

Key Takeaways

• This strike is about more than just wages; it’s a battle over the future of labor in the face of automation and the distribution of industry profits.
• Both sides have reasons to prolong the strike, despite the economic consequences.
• The Biden administration faces a difficult task in balancing support for labor with the need to resolve the strike swiftly.

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Craig Akers
Executive Director