Why US Port Workers Are Threatening to Strike, Again

(Bloomberg) --

Ever since metal boxes big enough to hold 50 refrigerators revolutionized shipping nearly 70 years ago, dockworkers have fought to defend the importance of skilled labor in global commerce. Yet technological advances in robotics and automation continue to threaten their roles, especially in US ports. The International Longshoremen’s Association, or ILA — the 47,000-member union that represents cargo handlers at every major Eastern US and Gulf Coast port — is threatening to walk off the job on Jan. 15 as its leaders seek new protections from automation. A strike would pose economic risks for the country and a political dilemma for President-elect Donald Trump just days before his inauguration. 

Why are US port workers threatening another strike?

The longshoremen — who play a key role in the global supply chain — are negotiating with the United States Maritime Alliance, or USMX, a group of shipping lines and terminal operators that employ them to load and unload container ships. In early October, a three-day ILA strike won generous pay concessions while barely denting the US economy; the union agreed to suspend its walkout until mid-January. 

A strike is still a possibility because one point of contention remains unresolved: the threat of automation. USMX had offered to maintain the automation language in the now-expired contract, but the ILA wants stronger protections — specifically closing loopholes that allow some of their duties to be done by semi-autonomous equipment. 

Who are the main players?

The ILA’s president is Harold Daggett, a third-generation member of the union and a Navy veteran who grew up in Woodside, Queens. He’s a tough-talking negotiator who previously helped ink two six-year deals with the USMX. Daggett has threatened to take his campaign against port automation global by boycotting companies that install machines that replace labor, no matter which country they’re in. Dennis Daggett, Harold’s son and his ILA deputy, wrote in a Facebook post in early December that “this is a pivotal moment in our history.” 

The Daggetts are up against David Adam, CEO of the USMX, which represents more than 30 port businesses including Maersk, MSC and COSCO. The two sides had previously negotiated 10 straight contracts without a strike. 

How is the shipping industry preparing?

In the event of a strike, companies should expect delays in cargo and higher freight rates, some of which could be passed on to American consumers through increased prices. On Dec. 24, Hapag-Lloyd alerted its customers to expect surcharges of $850 for 20-foot containers and $1,700 for 40-foot units affected by a strike.  

If a strike drags on for weeks, the container companies will cancel voyages so their vessels aren’t waiting outside harbors indefinitely. Their system is designed without much flexibility: A ship that’s delayed entering a port by a week will be a week late on its return trip. The end result is tighter capacity, which has been an ongoing issue because of Houthi attacks in the Red Sea that forced ships to take the longer route around southern Africa instead of passing through the Suez Canal. 

In the short term, less capacity can be a good thing for the carriers because it allows them to charge more. In the longer run, though, it leads to unreliable schedules and unhappy customers.

What’s the potential economic impact?

Most economists expect another strike will be a non-event if it lasts less than a week or two. Delayed shipments will arrive before long, and the hit to gross domestic product will be negligible. The forecasts for damage range from $1 billion to $5 billion in lost activity each day — a small fraction of the $29 trillion US economy. The problems start to compound, however, if it lasts more than a few weeks with component and product shortages weighing on industrial production and consumer sentiment. 

Most automakers, for instance, have contingency plans and ample inventories to weather a few weeks of a strike. Plenty of other businesses are apparently planning for the worst, too. The Port of Los Angeles, the nation’s busiest gateway for seaborne trade, is seeing brisk activity heading into 2025 without signs of bottlenecks — a pickup attributed to front-loading of import orders. But as the pandemic showed, supply disruptions tend to feed on themselves, as shortages cause businesses and households to stockpile out of panic.

What about the politics of a port strike?

The US president has the authority to end a strike and order the union back to work under the Taft-Hartley Act. Such intervention makes for tricky politics, however, given the US presidential inauguration on Jan. 20. Trump has spent time since his election win threatening various US trading partners with tariffs and calling for a more efficient federal government, but he’s also expressed support for the ILA’s fight against automation. While that could put pressure on the USMX to do a deal, some experts would argue that the long-term competitiveness of American ports would suffer if advances in automation that improve fluidity are disallowed in a new six-year contract with the union.

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--With assistance from Vince Golle.

©2025 Bloomberg L.P.