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Port strike ends as workers agree to tentative deal on wages and contract extension

Bryan R. Smith | Afp | Getty Images

A man walks along the railroad tracks at Port Newark in New Jersey, on October 4, 2024. 

  • The International Longshoremen's Association and the United States Maritime Alliance have agreed to a tentative deal on wages.
  • The two sides have extended their existing contract through Jan. 15 to provide time to negotiate a new contract.
  • The move ends a strike that had snarled East Coast and Gulf Coast ports since the beginning of the week and threatened U.S. supply of fruits, automobiles, and other goods.

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A major union for U.S. dockworkers and the United States Maritime Alliance agreed on Thursday to a tentative deal on wages and have extended their existing contract through Jan. 15 to provide time to negotiate a new contract.

The move ends a strike that had snarled East Coast and Gulf Coast ports since the beginning of the week and threatened U.S. supply of fruits, automobiles and other goods.

"The International Longshoremen's Association and the United States Maritime Alliance, Ltd. have reached a tentative agreement on wages and have agreed to extend the Master Contract until January 15, 2025 to return to the bargaining table to negotiate all other outstanding issues," The ILA and the the USMX said in a joint statement.

ILA wages will increase 61.5% over six years under the tentative agreement, sources told CNBC. Automation is a major issue over which the union and port ownership group remain divided and they have a little over 100 days to reach agreement on a final deal or face another strike.

Biden administration Acting Labor Secretary Julie Su was an important administration liaison working with both the union and port ownership group to reach a deal at meetings held in New Jersey on Thursday, according to a source familiar with the talks.

"The collective bargaining process really worked," said Su in an interview on CNBC's "Squawk on the Street" on Friday morning. "We've been saying it all along. When workers have a real voice at the table and when they can help to determine the conditions of their jobs, we're seeing really historic gains for working people, and we're also seeing it because we have such a strong economy. ... Companies that are making record profits are realizing that when they do right by their workers, it's better not just for working people, it's better for their industries, it's better for their future."

Supply chain congestion, delays will take weeks to unwind

During the week, the strike had already started to stress the U.S. supply chain. Thousands of containers had been dumped at the wrong ports, and billions of dollars in goods were anchored offshore because ports were not operational, CNBC previously reported. Shipping costs had already started to rise and consumers had begun to react by panic buying.

For every day of a strike, it can take up to a week to unwind the congestion and delays that build up within the supply chain. According to Everstream Analytics, this three-day all-out strike will likely take minimum three weeks to return to normal operations at U.S. ports.

The number of container ships waiting outside of U.S. Gulf and East Coast ports had decreased from Thursday night to Friday morning, down to 54, according to Everstream, as ships moved into the ports of Savannah and Charleston ahead of terminal reopenings. But its data showed that at the Port of New York-Newark, there had been an increase in ships at anchor. In all, 386,000 twenty-foot equivalent container units were waiting to be moved into ports.

At Georgia ports, operations resumed for truck gates, ocean terminals, vessel operations, and rail operations throughout Friday morning.

On Friday, one of the largest ocean carriers, Hapag Lloyd, confirmed the forecasts for the supply chain recovery period, telling Reuters it expected it to take three to four weeks.

Bethann Rooney, port director of for the Port Authority of New York and New Jersey, said including Friday morning, the strike lasted four days, a period of shutdown that has been experienced by the port in previous winter storms and extreme weather. She estimated 35,000 import containers that are on ships, and another 21,000 that were already in terminals, as "less than one week of normal activity. So I do expect that by this time next week, we will have serviced all of the vessels that were delayed, and that cargo will be flowing into the economy."

Secretary of Transportation Pete Buttigieg said in an interview with SiriusXM on Friday morning, "the parties were not as far apart as it sounded on economics. There were strong positions, strong personalities, but there was a deal space." He added that Hurricane Helene played a role in moving closer to a deal. "That's one thing that I emphasized when I was talking to the ocean carriers, urging them to get to a deal. You know, the last thing that emergency responders need is to be looking over their shoulder, wondering if they're going to be impacted by a strike."

President Biden had said on camera Wednesday, "The last thing we need on top of that is a manmade disaster — what's going on at the ports." 

Critical port automation issue remains

The strike was the first by the ILA since 1977, and it impacted operations at 14 different ports. About 50,000 of the union's 85,000 members were on strike this week. ILA President Harold Daggett had said the union was asking for an increase of $5 per hour for each year of the six-year contract.

Acting Labor Secretary Su said on CNBC on Friday morning that the conversation over technology and improvements offered through automation will be a key conversation, and as part of those discussions between now and the end of the tentative deal on Jan. 15, making sure "working people share."

"It's the same issue as around the wages," Su said. "There are ways to do that. Automation is going to be something the parties continues to talk about and this is why the workers having a say is so important," she said, referencing a sign that many picketing ILA union workers held up during the strike displaying the words, "Machines don't have families."

Other countries have moved much faster than the U.S. to adopt automation at ports, but Su said, "In many countries, people aren't as afraid of what's going to happen with automation because there is so much attention to job security."

Industries which had pleaded with the Biden administration to step in once the strike started breathed a sigh of relief after the tentative deal, with a major consortium of retailers, the Retail Industry Leaders Association, noting in a statement that "without the specter of disruption looming, the U.S. economy can continue on its path for growth and retailers can focus on delivering for consumers." 

The National Association of Manufacturers said in a statement that it was "encouraged that cooler heads have prevailed. ... .it is a victory for all parties involved — preserving jobs, safeguarding supply chains and preventing further economic disruptions."

But NAM warned that a lasting agreement will be necessary to avoid future damage to the economy. "Another strike would jeopardize $2.1 billion in trade daily and could reduce GDP by as much as $5 billion per day," it estimated in its release.

Copyright CNBC
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