Higher prices, rotten fruit and more: How the Longshoremen strike could impact consumers

A major dockworkers strike is underway in ports across the country as thousands walked off the job just after midnight Tuesday, shutting down dozens of ports along the East and Gulf Coasts in a strike over wages and automation that could reignite inflation and cause supply shortages of goods if it goes on more than a few weeks.

As of midnight, 36 ports form Maine to Texas were shut down after the contract between the ports and about 45,000 members of the International Longshoremen’s Association expired. Those ports handle about half of the goods shipped into and out of the U.S.

Workers began picketing at the Port of Philadelphia shortly after midnight, walking in a circle at a rail crossing outside the port and chanting “No work without a fair contract.”

The union had message boards on the side of a truck reading: “Automation Hurts Families: ILA Stands For Job Protection.”

Local ILA president Boise Butler said workers want a fair contract that doesn’t allow automation of their jobs.

Shipping companies made billions during the pandemic by charging high prices, he said. “Now we want them to pay back. They’re going to pay back,” Butler said.

The strike will likely have an almost immediate impact on supplies of perishable imports like bananas, for example. The ports affected by the strike handle 3.8 million metric tons of bananas each year, or 75% of the nation’s supply, according to the American Farm Bureau Federation.

If it goes more than a few weeks, a work stoppage would significantly snarl the nation’s supply chain, potentially leading to higher prices and delays in goods reaching households and businesses. It would force businesses to pay shippers for delays, and potentially impact the delivery of anything and everything -- from toys, to artificial Christmas trees, to cars, coffee and fruit.

As the strike continues, here's what's at stake, why the Longshoremen are striking, what products could be affected and more.

Why are the Longshoremen striking?

The International Longshoremen’s Association is demanding significantly higher wages and a total ban on the automation of cranes, gates and container-moving trucks that are used in the loading or unloading of freight at 36 U.S. ports. Those ports handle roughly half of the nations’ cargo from ships.

The contract between the International Longshoremen’s Association and the United States Maritime Alliance, which represents the ports, expired Tuesday. The two sides haven’t held negotiations since June. A strike by the ILA workers would be the first by the union since 1977.

“The Ocean Carriers represented by USMX want to enjoy rich billion-dollar profits that they are making in 2024, while they offer ILA Longshore Workers an unacceptable wage package that we reject,” the ILA said in a statement on Monday.

The U.S. Maritime Alliance, which represents the ports, said Monday evening that both sides had moved off of their previous wage offers. But no deal was reached.

The union’s opening offer in the talks was for a 77% pay raise over the six-year life of the contract, with President Harold Daggett saying it’s necessary to make up for inflation and years of small raises. ILA members make a base salary of about $81,000 per year, but some can pull in over $200,000 annually with large amounts of overtime.

But Monday evening, the alliance said it had increased its offer to 50% raises over six years, and it pledged to keep limits on automation in place from the old contract. The union wants a complete ban on automation. It wasn’t clear just how far apart both sides are.

“We are hopeful that this could allow us to fully resume collective bargaining around the other outstanding issues in an effort to reach an agreement,” the alliance statement said.

In a statement early Tuesday, the union said it rejected the alliance’s latest proposal because it “fell far short of what ILA rank-and-file members are demanding in wages and protections against automation.” The two sides had not held formal negotiations since June.

“We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve,” Daggett said in the statement. “They must now meet our demands for this strike to end.”

The alliance said its offer tripled employer contributions to retirement plans and strengthened health care options.

Which ports are affected?

While any port can handle any type of goods, some ports are specialized to handle goods for a particular industry. The ports that would be affected by the shutdown include Baltimore and Brunswick, Georgia, the top two busiest auto ports; Philadelphia, which gives priority to fruits and vegetables; and New Orleans, which handles coffee, mainly from South America and Southeast Asia, various chemicals from Mexico and North Europe, and wood products such as plywood from Asia and South America.

Other major ports affected include Boston; New York/New Jersey; Norfolk, Virginia; Wilmington, North Carolina; Charleston, South Carolina; Savannah, Georgia; Tampa, Florida; Mobile, Alabama; and Houston.

What will a longshoremen strike affect? Prices, fruit, toys and more

The first thing that's going to be impacted is fresh produce, like bananas, and fresh seafood, experts said, as about $17 billion worth of fresh seafood comes through these ports.

The ports affected by the strike also handle 3.8 million metric tons of bananas each year, or 75% of the nation’s supply, according to the American Farm Bureau Federation.

Soybeans, poultry, raw sugar, rum and more could also be impacted, experts said.

"For retailers the East Coast and Gulf Coast ports are a critical part of our consumer electronics, to footwear, to food products, canned goods and other products," Johnathan Gold, an economist with the National Retail Federation said.

If it goes more than a few weeks, a work stoppage would significantly snarl the nation’s supply chain, potentially leading to higher prices and delays in goods reaching households and businesses.

If drawn out, the strike will force businesses to pay shippers for delays and cause some goods to arrive late for peak holiday shopping season — potentially impacting delivery of anything from toys or artificial Christmas trees to cars, coffee and fruit.

It also could snarl exports from East Coast ports and create traffic jams at ports on the West Coast, where workers are represented by a different union. Railroads say they can ramp up to carry more freight from the West Coast, but analysts say they can’t move enough to make up for the closed Eastern ports.

“If the strikes go ahead, they will cause enormous delays across the supply chain, a ripple effect which will no doubt roll into 2025 and cause chaos across the industry,” noted Jay Dhokia, founder of supply chain management and logistics firm Pro3PL.

J.P. Morgan estimated that a strike that shuts down East and Gulf coast ports could cost the economy $3.8 billion to $4.5 billion per day, with some of that recovered over time after normal operations resume.

Will the strike affect holiday shopping?

Jonathan Gold, vice president of the supply chain and customs policy at the National Retail Federation, the nation’s largest retail trade group, said the possible strike comes as the supply network continues to face challenges from ongoing Houthi attacks on commercial shipping that have essentially shut down the use of the Red Sea and Suez Canal.

The uncertainty also comes during the peak of retailers’ holiday shipping season, which traditionally runs from July through early November. Many big retailers, anticipating a strike, started shipping their goods to U.S. distribution centers in June, and Gold noted that a majority of products are already in the U.S.

But retailers will have a hard time replenishing items and are incurring extra warehouse costs to store goods longer. Gold also noted that carriers are already announcing surcharges on containers to address potential disruptions.

The Toy Association, the nation’s leading toy trade group, was one of roughly 200 trade groups that sent a joint letter to President Biden earlier this month urging the administration to work with ILA and USMX to come up with a contract. Greg Ahearn, its president and CEO, noted that a strike would happen at an extremely critical time for toy sellers and makers — up to 60% of a toy company’s annual sales come during the fourth quarter. The holiday shipping window for the toy industry is anywhere from six to eight weeks and started in July, though some toy companies tried to ship earlier or add more toys to shipments, he said.

“It hits many ways,” he said. “From a consumer perspective, it starts with delays in availability and then starts to surface as product shortages within toys. At retail for the toy industry, it results in potentially higher prices based on scarcity and increased costs.”

Can the government intervene?

If a strike were deemed a danger to U.S. economic health, President Joe Biden could, under the 1947 Taft-Hartley Act, seek a court order for an 80-day cooling-off period. This would suspend the strike.

But Biden, during an exchange with reporters on Sunday, said “no” when asked if he planned to intervene to plan a potential work stoppage impacting East Coast ports.

“Because it’s collective bargaining, I don’t believe in Taft-Hartley,” Biden said.