45,000 dock workers walk off the job from ME to TX, threatening car imports and disrupting global trade

Midnight only marks the beginning

It’s 12:01 Eastern Time. That’s the deadline the International Longshoremen's Association (ILA) set to begin their strike. There is no clear end-date in sight.

That doesn’t mean this situation came out of nowhere. The contract has been set to expire in September since it was laid down six years ago, and the ILA President Harold Daggett has made it clear for months now he intended to call the strike if a new master contract is not signed by that date.

In a now seemingly retracted portion of their article, Reuters claimed an anonymous source to have asserted that no serious negotiations have been planned or had since June. The article still reports no meetings are scheduled between the union and the port owners.

$540 million a day in estimated economic damage

The Conference Board, a non-profit business research group, estimates over half a billion dollars in economic damage for every day the strike lasts. The group also reports these 36 ports affected by the strike handle 57% of US container trade, which includes many of the automotive parts relied on by US and Global auto manufacturers. These ports also handle a quarter of total US trade volume.

As reported by Investopedia, shipping giant Maersk estimates that for every week the strike lasts, it will take between four and six weeks to work through the backlog, and specific items may be delayed far longer.

Related: Ford CEO Jim Farley says no more “boring cars”

Almost no one will be unaffected

It is not just automakers, dealerships, and those looking to buy a car who will be affected either. Virtually every sector of the economy, from Amazon to farmers, construction workers to truck drivers, rely on the free flow of goods through ports to function in their day to day operations.

If you sell a material good, use a physical tool, use supplies or raw materials, or even drive combustion engine cars, the availability and price of everything is set to skyrocket exponentially if the strike isn’t ended soon.

October surprise for both Trump and Harris

This strike lands as something of an ‘October Surprise’ for the 2024 Presidential election. However, instead of being an airing of dirty laundry, or a roll out of a new policy promise to sway voters, this particular event is outside the control of both candidates.

However, with the economy ranking as one of the most important concerns in just about every poll in every election since polling was first conducted, it is impossible for this strike not to have an impact on how some voters cast their ballots.

President Biden on course to allow things to work out on their own

President Biden has been urged by as many as 177 industry associations to invoke a 1947 law called the Taft-Hartley Act, which would call for a ‘cooling off’ period of 80 days on any strike which threatens the national economy and wellbeing. However, Biden has been clear in signaling his intention to stand aside and let both sides work things out without his interference.

It may be that he is reluctant to declare a state of emergency so close to an election, but what is certain is that this strike puts the President in a difficult place, having to balance his stance as labor-friendly against a commitment to strengthening the economy.

Related: Impending port strike could paralyze global supply chains and cripple car imports

Retail shortages and 2025 car model delays almost certain

With no end to the strike yet in sight, and the consequences dire for every day it is allowed to continue, the retail industry is bracing for shortages of all manner of goods leading into the busiest retail season of the year, and perhaps the first one to have mostly recovered from the supply chain shock of the pandemic and shutdowns caused by it.

It is unclear at this point how severely new car models will be delayed as part of this broader retail shortage. Many 2025 cars are set to start showing up on dealer lots this month and onwards, and for every day this strike lasts, the delay to their appearance could be measured in weeks.

“Machines don’t have families” says ILA President

Despite all the pain this strike will cause, it is not difficult to understand why the ILA is pressed to hold out for their demands. According to ILA Harold Daggett in an interview on the ILA Youtube channel, automation and AI threaten not only dockworkers, but every American.

The previous 6-year contract contained provisions preventing fully autonomous container processing sights, which may or may not have already been broken by the efforts to develop the Los Angeles port gates to be capable of autonomous operation.

The ILA wants firm guarantees that their jobs will be protected and that automation and AI will not replace workers for the indefinite future.

Billions USD in growth, and workers still feeling the squeeze

Daggett, who by his own account has been with the industry before containerization was even implemented, was clear that the gap between his workers’ share of the profits has grown wider and wider over the years. While to many Americans the proposed $6 raises for the next 5 years, ending in a $69 base pay sounds absolutely dreamy, to the ILA, it’s just getting back to their fair share of the profits.

“They’re not making millions no more, they’re making billions” says an impassioned Daggett. He then further explains that his people were the ones who elevated international shipping to the heights of profit currently enjoyed, and instead of being rewarded, automation is trying to get rid of them.

The dangers of heat, cold, and Covid-19 were endured by ILA workers, according to Daggett, and now it is time for them to be compensated.

Final thoughts

Every indicator thus far points to no action being taken by either party to restart negotiations. At the same time, everyone agrees this strike will be very destructive to the economy if allowed to continue for any length of time.

Most likely (or perhaps, most hopefully), this is a posturing by both the longshoremen and port owners, and once the strike kicks in, we will hear about resumed negotiations within 12-24 hours, with a settlement coming soon after.

If not, though, buckle up. I think the words of Daggertt sum up best how bad things could get: “People today don’t know what a strike is” and by week two “...guys who sell cars can’t sell cars no more” because they aren’t there to sell.