Dockworkers’ East Coast strike could affect Port of Philadelphia

Tens of thousands of dockworkers on the East and Gulf Coasts are preparing to go on strike starting next week if their union and seaport employers can’t reach a deal on a new contract.

The prospect of a strike has already caused shippers to redirect cargo to West Coast ports. A prolonged work stoppage could inject new uncertainty into the economy weeks before the November presidential election, even as inflation has stabilized and the Federal Reserve recently cut interest rates.

Ports in Philadelphia and elsewhere are preparing for the potential fallout. “What I can say is that every day of disruption is at least five days of digestion,” said Leo Holt, president of Holt Logistics Corp., which operates Philadelphia’s largest container terminal. “The supply chain itself has a very sensitive digestion.”

Here’s what you need to know.

The International Longshoremen’s Association’s six-year contract with port employers expires on Sept. 30, and ports are bracing for a strike starting the next day. The union, which represents 45,000 workers at ports from Maine to Texas, says that the shipping industry has recorded record profits in recent years and that its members deserve compensation “commensurate with their contributions.”

“They cannot nickel and dime us, while posting billion-dollar profits,” Harold J. Daggett, the union’s president, said last month. Employers, including ocean carriers and terminal operators, are represented by the U.S. Maritime Alliance.

Contract talks have focused mostly on wages and a union-proposed ban on further automation of cranes that could cost jobs, the Associated Press reported. The two sides haven’t bargained since June, but the union said earlier this week that they have continued to communicate and that the Maritime Alliance has provided misleading information about negotiations.

The AP reported that top-scale port workers earn about $81,000 a year, though some can make more than $200,000 with overtime and benefits. Their pay lags their West Coast counterparts, who are represented by a different union.

The ILA initially sought 77% pay raises over six years, according to the AP, but the union said that wage increase calculation is misleading.

The Maritime Alliance filed an unfair labor practice this week with the National Labor Relations Board, asking the federal agency to order the union back to the negotiating table. A coalition of manufacturers, farmers, wholesalers, retailers, restaurants, distributors, and other businesses has asked the White House to intervene, warning that a strike “would have a devastating impact on the economy, especially as inflation is on the downward trend.”

President Joe Biden has the authority to prevent or halt a strike under a 1947 law.

The Port of Philadelphia is a relatively small player among U.S. ports in terms of the total amount of cargo it handles. But it’s a major gateway for produce.

Members of the International Longshoremen’s Association Local 1291 work at multiple Philadelphia facilities, including the port’s biggest container terminal, the Packer Avenue Marine Terminal near the Walt Whitman Bridge. The terminal, which is owned by a state agency and operated by Holt Logistics, handles cargoes such as fruit, frozen meat, steel products, and paper.

ILA members also work for Delaware River Stevedores Inc., which operates the publicly owned Tioga Marine Terminal near the Betsy Ross Bridge.

Holt said West Coast ports have already seen a surge of cargoes in the last two months, as shipping lines hedged their bets against a strike. He said he hasn’t yet seen Philadelphia’s foodstuffs diverted yet, though.

“The sad reality is … container lines have instituted surcharges for this disruption,” said Holt, whose company employs about 500 longshoremen, though the number varies based on workload. “That is, to me, a harbinger of any costs are just going to be born by the American consumer.”

Boise Butler, president of ILA Local 1291, didn’t return a request for comment.

There wouldn’t be a total shutdown of port activity in the Philadelphia area, however, as some facilities are operated by companies that employ workers represented by different unions.

Penn Terminals, which owns and operates the Port of Chester, employs members of the International Brotherhood of Boilermakers. John P. DiDomenicis III, owner of trucking firm Tri State Intermodal, said more cargoes that would typically move through Packer Avenue are now being routed through Penn Terminals.

John Brennan, Penn Terminals’ president, said his company would be “open for business as usual.”

Consumers are unlikely to see significant shortages, as retailers have tried to mitigate the impact of a possible strike “by bringing in products earlier or shifting products to the West Coast,” Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, told CBS News.

Yet a prolonged strike could cause prices to increase for some goods, especially perishable products like food.

In Philadelphia, Holt said a lot of refrigerated cargoes are in storage already. “I think you might see some shortages, but it’ll be fine,” he said.