Inside the Deal That Held Off the Dock Workers Strike
(Bloomberg) -- Never miss an episode. Follow The Big Take daily podcast today.
Most Read from Bloomberg
Singapore Ends 181 Years of Horse Racing to Make Way for Homes
From Cleveland to Chicago, NFL Teams Dream of Domed Stadiums
Urban Heat Stress Is Another Disparity in the World’s Most Unequal Nation
For a Master of Brutalist Provocations, a Modest Museum Appraisal
Shipping ports all along the East Coast and Gulf Coast shut down earlier this week, as the 47,000 members of the International Longshoremen’s Association went on strike. Their demands: A pay raise of nearly 80% over 6 years and strict limits on the use of automation in the nation’s ports. Shipping companies refused and worries mounted that the strike could drag on for weeks, creating gridlock at the ports, and recreating some of the pandemic-era supply chain snarls.
But dockworkers and shipping companies struck a temporary deal late Thursday. Today on the Big Take, Sarah Holder and reporter Laura Curtis talk through the details of the deal, why the White House got involved and who the winners and losers are.
Listen and follow The Big Take on Apple Podcasts, Spotify or wherever you get your podcasts
Terminal clients: click here to subscribe.
Here is a lightly edited transcript of the conversation:
Sarah Holder: This week, at every major port along the East and Gulf coasts of the United States work ground to a halt.
Archival: [Sounds of faint chanting, music, crowds] We run these docks. Who runs the docks? ILA!
Holder: The 47,000 dockworkers in the International Longshoremen’s Association went on strike Monday night, demanding a pay raise of 77% over the next 6 years as well as strict limitations on automation at the ports.
The ports the strike shut down handle nearly half of the containers that come in and out of the US every day
Curtis: From Houston, New Orleans, Mobile, Alabama, a bunch of ones in Florida, you know, uh, Georgia, South Carolina, North Carolina, Virginia, and all the way up to New York
Holder: Laura Curtis covers ports for Bloomberg. And she’s had a whirlwind of a week.
Because on Thursday night, after days of seemingly deadlocked negotiations, the dockworkers struck a tentative deal with the US Maritime Alliance, which represents the shipping companies.
And just like that, the strike was over. Today, the ports are once again open for business.
And a potential crisis was averted – one that could have caused chaos for companies, consumers, and the entire US economy – it could have even affected the outcome of the presidential election.
Crisis averted … for now anyway.
Curtis: It was really kind of a “we’ll promise to pay you this much in the next next round while we continue to work out the tougher issues so that we can get back to work.”
Holder: Under the terms of the tentative deal, the dockworkers’ current contract has been extended until January 15th.
The shipping companies agreed to a substantial raise 62% over the term of their next six-year contract.
But this agreement is tentative – meaning that until January 15th, the dockworkers will keep the ports open while they continue to negotiate other terms of their contract.
Now, the question is – will the longshoremen and the shipping companies be able to come to a solid deal before their contract expires in the new year?
Today on the show: What drove tens of thousands of dockworkers to go on strike, how the strike got paused — and why the fight against automation at ports could bring the longshoremen back to the picket lines next year.
This is the Big Take from Bloomberg News, I’m Sarah Holder.
Holder: Last night, a massive strike that shut down every major port on the East Coast and Gulf Coast of the US suddenly ended.
Laura Curtis, who’s been covering the strike for Bloomberg, says that the resolution brought a lot of people a sense of relief.
Curtis: So, the dock workers went on strike on Monday night into Tuesday morning, it affected ports at all up and down the eastern seaboard that typically process about 50 percent of U. S. imports and exports. So, everybody was really concerned about how long it would last and what the overall impact to the economy would be.
Holder: The International Longshoremen’s Association, or the ILA, was asking for a 77% raise over 6 years and also strict limits on the use of automation at ports, including for things like gates, cranes and trucks.
Curtis: It's important to keep in mind too, you know, they, the last time they negotiated wages was six years ago. A lot has changed since then. Inflation has taken a huge bite out of that paycheck, right? In addition to that, they worked really hard through the pandemic. And so their position has been We deserve a share of the profits that these shipping companies earned on their backs, basically. And then it started, I started hearing more about, more intractable things like automation and the use of technology and the really deeply instilled fear that, you know, robots were going to take over their jobs.
Holder: Those dockworkers were facing off with an organization known as the US Maritime Alliance, or USMX. It’s a group of shipping lines and companies that operate port terminals. Most of the companies are based overseas.
At first, USMX offered workers a 40% raise, but the union rejected the offer, and kept pushing for more.
For consumers and businesses, the strike, which threatened to drag on for weeks, brought to mind one thing: The logjams US ports experienced during the pandemic. Logjams that saw ships full of containers sitting idle offshore for weeks causing store shelves to sit empty, factories to grind to a halt and prices to begin an upward climb that the US economy is still grappling with.
Curtis: I mean, they had, you know, millions of dollars of cargo that was stranded in these containers on, on the vessels and just weren't sure when it was going to come. Presented a lot of planning difficulties, and I think the other part of this that is interesting, even though it didn't go on too long, you, you started to see some kind of psychological impacts in the public. People were starting to panic buy things like toilet paper and, uh, paper towels and, you know, we were starting to see things that reminded us a little bit of the pandemic. And, you know, I had one colleague who was like, this is too soon. You know, this is PTSD. I don't know. This is too much. She heard from a friend that there was no paper towels at her supermarket left and, you know, just just that kind of thing.
Holder: Shivers run through you thinking about that time.
Curtis: Yeah, absolutely. Like, we're not ready, you know. So it was, it's not just about the impact that it had, but I think the fear around it.
Holder: The timing was delicate, with a critical presidential election just four weeks away. Having the ports closed, and shortages looming, would look bad for Biden and for Harris – but so would using presidential powers to stop a strike. The White House had been putting pressure on both sides to come to a deal.
And then last night, as suddenly as the strike had started, it ended.
Curtis: So Thursday night, um, we started hearing rumors that they may be close to some kind of agreement, not on the formal long term contract, but just something that would get us through and reopen the ports, get cargo flowing again.
Holder: Where were you when you heard the news?
Curtis: Where was I? I was in my bedroom. I was working really hard, uh, remotely and, um, trying to figure out kind of where the news was gonna come from. We had, I was working with my colleagues in the White House. I was working with my colleagues in New York. I was working with photographers that we had dispatched to the picket lines and some reporters we sent to places like Wilmington, North Carolina, where there was a port there, um, that, that was affected and, and talking to local longshoremen.
Holder: It was not the 77% raise the dockworkers had initially demanded but it was a major raise: 62% over the life of the new 6 year contract.
Curtis: And that will kick in when the, when the next contract starts right now, they're, they've agreed to continue working under the previous contract until January 15th.
Holder: For now, ports are back up and running. The election will be decided before the dockworkers’ contract expires again.
But one of the key issues that drove dockworkers to strike — automation – likely won’t be resolved by next year.
Curtis: The ILA's president, Harold Daggett, has said several times that he won't accept any deal that allows automation.
We’ll get how the tentative deal was reached – and what sticking points remain – after the break.
Holder: When the dockworkers went on strike earlier this year, the nation braced for the supply chain snarls and shortages we all experienced during the pandemic.
The strike was costing the US economy an estimated 3 to 5 billion dollars a day and there were worries those costs could mount if the strike dragged on.
Editor Laura Curtis prepared for weeks of breaking news updates as the story unfolded and she took calls from sources across the country late into the night.
Curtis: It was getting a little bit, a little bit stressful, you know, even for me from my bedroom.
Holder: But it didn’t take weeks. It took days. I asked Laura how they reached a tentative resolution so quickly.
Curtis: Well, there are a couple of things I think that may have helped in a weird way. The biggest one being the hurricane that hit huge parts of the areas that are affected by the strike, right? Hurricane Helene wiped out parts of North Carolina. It really hit Florida hard. We had Governor DeSantis declaring that he was going to send the National Guard in to reactivate the ports somehow. Or, at least to help out wherever that he could they could and so I think Biden's aides were successful in bringing that to the attention of both sides and saying, “Listen, this is not helping with hurricane recovery. This is not fair. This is unsafe.” And I think that, you know, that that got through that message, got through. Neither side wanted to be seen as imperiling an already imperiled situation.
Holder: Laura says her sources also revealed that both sides of the port negotiations were under extreme pressure to make a deal as quickly as possible. The White House was pushing for a resolution behind the scenes.
Curtis: We now know from sources the USM.X. Board was convened yesterday morning and Biden's top economic advisor, Lael Brainard, was the one who's sort of dispatched to put the screws on them and to work with them and to, to educate them about what's at stake here. On the other side, we had Acting Secretary Julie Su, who traveled to New Jersey yesterday and met with union leaders to try to convey the same message. We knew that Biden really, really didn't want to break the strike. And that was something that they communicate, they kept communicating to both sides.
Holder: He could have broken the strike using a power called Taft Hartley to force the union back to work for a period of 80 days, but you're saying he did not want to do that.
Curtis: He did not want to do that. It would be a terrible look politically for him, um, to break a strike in, you know, just weeks away from an election where getting the, the the union vote and the working class vote is so important. We also heard from. The ILA president, Daggett, that if, if Biden did invoke that power, he would have directed his longshoremen to slow the roll at the ports.
I think he said he would reduce efficiency. So it was never a good option for Biden to even threaten that.
Holder: So let's talk about Harold Daggett for a second. He's something of a colorful guy. He's the head of the International Longshoreman's Association, and he's been throwing around a lot of strong language, not only threatening to slow down shipping if Biden broke the strike, but also saying he was going to crush the opposition were you surprised that he came to the table for this? compromise to reach this deal?
Curtis: I don't know. Um, you know, I think he is a very shrewd negotiator. I think we saw that. I think he's the head of a very powerful union. I think 62% wage increase is pretty good. You know, dock worker on the west got 32% and we were all thinking it would be much closer to that. So, I'm not surprised in that way that he agreed to go back to work under those terms. However, the other thing about Harold Daggett is he was committed to making the public understand his power.
Holder: Well, it seems like ultimately hitting pause on the strike is a good thing for many parties here, for now. The workers, the economy, global commerce, potentially. But is there a concern that the union might lose some of their leverage if they wait till January?
Curtis: Absolutely, they've lost some leverage just by virtue of the election being in the past, but you know, at the end of the day, they, we've seen, they can shut down the ports, you know, they can halt about 50 percent of U.S. imports and exportsin a day.
Holder: Hmm, so they've really shown the power of their movement with even this less than a week long strike.
Curtis: Right, I think in a way, they’ve proven their leverage.
Holder: What does this resolution, or this temporary resolution, mean for the economy writ large?
Curtis: Oh, it means we can keep going. Economists were saying, as the strike went on we have enough reserves. Retailers have enough stockpiled goods. Um, so that we wouldn't really feel an impact until week two of the strike. But by then, you know, people were starting, would start to get worried.
Holder: That seems to be good news for the current president, but what does this mean for the November election?
Curtis: It's really good news, not just for Biden, but for Kamala Harris and Donald Trump. Neither of them wanted to talk about this. Neither of them wanted to face it. Neither of them really wanted to get in the middle of it. You know, it wasn't, they both want, they both need to be seen as supporting the union. But the longer this went on, I think it would be really hard to make the case that this was good for every working man or every middle class person or every small business. This strike because it shuts so many crucial ports had the potential to really impact the lives of a lot of voters and not just the union.
Holder: Even so – Laura says the stickiest part of the deal could lie ahead: what to do about automation at ports.
Curtis: Now, there are some carve outs already in the existing deal that allow for things like semi automation, which is, you know, um, uh, a crane that can be, that's driverless but can be controlled remotely by a person, that kind of thing. I think the murkier issue is things around artificial intelligence and how those types of automation might come in and impact the jobs that these dock workers have. So that's going to be the hardest thing for them to work out from this point.
Holder: so the longshoremen have their wage increase, but automation is still a huge open question. What's going to happen in January?
Curtis: Well, the shipping companies and the union are going to have to figure out a way to either agree on what the language around automation in the existing contract means, or they're going to have to find a new way to phrase it, that everybody's happy with, you know, Harold Daggett has been saying that he wants to tighten the language on automation. Harold Daggett has said a lot of different things about what he wants. I know that he wants to take this fight globally though. And, he said that his next stop after this is resolved is to convene an organization of international dock workers to take on the fight against automation, not just in the United States, but all over the world. The automation and artificial intelligence piece of this is not unique to the union, or to this union. It's not unique to dock workers. We saw it out here in Hollywood with artificial intelligence. We're seeing it all in, in several of these knock down drag out contract fights. So I think this, you know, you asked if this could happen again in six years. I think absolutely.
This is The Big Take, from Bloomberg News. I’m Sarah Holder.
Most Read from Bloomberg Businessweek
Hamas Struck Israel to Spark a Wider Conflict. A Year Later, It’s Got One.
Rotting Rice in India Fuels Discontent About Modi’s Food Policy
How a Short Seller’s Attack Threatens This Spanish Family Company
©2024 Bloomberg L.P.