Port workers strike from Texas to Maine, threatening light-vehicle and parts shipments

U.S. East and Gulf Coast port workers went on strike early Tuesday, even as a port operator alliance said it traded new wage offers with the union, dashing hopes for a settlement before a halt to container traffic from Maine to Texas.

The strike could have significant effects on the automotive supply chain. The ports covered by dockworkers handled $37.8 billion worth of vehicle imports during the 12 months ended June 30, 2024, according to S&P Global Market Intelligence. 

And that figure does not include shipments of vehicle parts, shortages of which could lead to plant shutdowns if the strike persists, said Bill Long, CEO of MEMA, which represents companies in the automotive supply chain.

“If it’s a lengthy strike, we’ve heard from members that it’s going to be a disaster,” Long told Automotive News. “It’s going to shut down some plants and production lines and cause layoffs.”

The labor contract between the International Longshoremen's Association union representing 45,000 port workers and the United States Maritime Alliance employer group expired late on Monday, with negotiations at an impasse over pay.

The USMX said in a statement on Monday it had offered to hike wages by nearly 50 percent and traded new proposals with the union in the last 24 hours and asked for an extension of the current master contract.

"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," USMX said.

The strike would cost the U.S. economy roughly $5 billion a day, JP Morgan analysts estimated, as shipments of cars and light trucks, food, retail goods and other products are disrupted from busy terminals including New York, Baltimore and Houston.

The Port of Baltimore is the busiest port in the U.S. for automotive imports. It handled 847,158 vehicles in 2023, the most of any U.S. port for the 13th consecutive year, according to data from the state of Maryland.

Retailers and auto companies in recent months have accelerated holiday imports and are moving other shipments to the U.S. West Coast where possible.

"We expect the strike itself to last for five to seven days until a government intervention... but the ripple effect is likely to be felt across the whole network into Europe, into Asia for at least into January, February," said Peter Sand, chief analyst at shipping pricing platform Xeneta.

The strike will have wide-reaching impacts on the auto industry, said Jack Hollis, head of sales for Toyota Motor North America.

“I don’t care if it’s one day, two days — every single day of these things can cause issues for people to consider,” he said. “And yeah, this will affect everybody; it just does.”

Barclays researchers said they expect European automakers such as BMW, Mercedes, Volkswagen and Volvo to be among the car companies whose imports would be affected, but noted that relatively high inventories will shield the immediate impact.

Hyundai Motor America is in “close contact” with its logistics affiliate, Hyundai Globis, CEO Randy Parker said. The automaker utilizes ports in Philadelphia and Brunswick, Ga. 

The automaker is “working up on contingencies to ensure that we have steady processing and delivery of Hyundai vehicles,” he said. “They’ve been good over the years at managing disruptions, and so we’re going to do our best to try to manage this disruption as well.”

General Motors is “carefully monitoring the situation and [has] contingency plans in place,” a spokesperson said, adding that the company will work to mitigate any impacts to its operations.

Ford is monitoring the situation, a spokesperson said, adding that it was too early to speculate on potential impacts.

There has been no impact to Stellantis' operations thus far, it said in a statement.

"The company is taking the necessary actions to mitigate any potential impact to production or our ability to deliver vehicles to our customers," the automaker said.

MEMA’s Long said the organization was invited to an Oct. 1 briefing at the White House. MEMA is urging the Biden administration and members of Congress to “get involved on a bipartisan basis to counter this crisis,” the organization wrote in a letter to its members.

“There are thousands of components in a vehicle and thousands of suppliers,” Long said. “One component that holds up that process is all it takes to create greater disruption.”

Barclays analyst Dan Levy said 70 percent of auto parts imports into the U.S. come via the affected ports, although companies likely built up some inventory since the strike risk had been visible for a while.

A source briefed on the matter said USMX made the new offer earlier, to which ILA responded in a statement calling it "an unacceptable wage package that we reject."

It is the first coast-wide ILA strike since 1977, affecting ports that handle about half of the nation's ocean shipping.

Marine terminals closed at 5 p.m. ET and nearly 100,000 containers will remain stored at the port until the strike is ended, Rick Cotton, who heads the Port Authority of New York and New Jersey, said on Monday.

Another 35 ships are expected to arrive at the port over the next week and they will remain at anchor during the strike.

U.S. Chamber of Commerce President Suzanne Clark urged President Joe Biden to use his authority to prevent a walkout for 80 days, saying it "would be unconscionable to allow a contract dispute to inflict such a shock to our economy."

Biden said on Sunday he did not plan to intervene.

The White House reiterated on Monday it was not considering using the federal Taft-Hartley Act to halt a strike, which would force workers to go back on the job while negotiations continue.

White House Chief of Staff Jeff Zients and top economic adviser Lael Brainard held a meeting with USMX board members on Monday urging them to resolve the dispute fairly and quickly, a White House official said.

The union has previously said the strike would not impact military cargo shipments or cruise ship traffic.

The strike could stop the flow of everything from food to automobiles at major ports, potentially jeopardizing jobs and stoking inflation weeks ahead of the U.S. presidential election.

New York Gov. Kathy Hochul said the strike could impact things like automobile imports but the state expects no immediate impact on food suppliers or essential goods.

"We're deeply concerned about the impact a strike could have on our supply chains, especially when it comes to critical goods like medical supplies and others," Hochul said.

National Association of Manufacturers CEO Jay Timmons said a strike would throw manufacturing supply chains throughout the U.S. into disarray. "Billions of dollars of goods — from food to vehicles to electronics — rely on access to the East and Gulf Coast ports," Timmons said.

A short strike could have a limited economic impact given many companies have imported extra goods ahead of a possible work stoppage or shifted more shipments to West Coast ports. But a strike that continues for weeks could have serious economic impacts.

"These people today don't know what a strike is," Harold Daggett, the ILA's fiery leader, said in a recent video post. "I'll cripple you. I will cripple you."

John Irwin, Carly Schaffner, Larry Vellequette and Vince Bond contributed to this report.