Striking members of the International Longshoremen’s Association (ILA) are set to resume work on Friday following a tentative agreement with the United States Maritime Alliance (USMX), the management group representing shipping lines, terminal operators, and port authorities. The deal was announced by the union on Thursday evening, marking a breakthrough in the ongoing negotiations.
The tentative contract includes a $4-per-hour raise each year for the next six years, according to a source familiar with the negotiations. This raise translates to a more than 10% wage increase in the first year, based on the current top hourly wage of $39. Over the span of the contract, the cumulative wage hike will amount to a 62% increase.
In light of the agreement, the union has agreed to extend its contract with USMX, which had expired on Monday, until January 15. This extension allows workers to return to their posts while the final details of the agreement are negotiated. The deal will still need to be ratified by the union’s rank-and-file members before it becomes official.
President Joe Biden applauded the tentative agreement in a statement, praising both the dockworkers and the port operators for their efforts. He said, “Today’s tentative agreement on a record wage and an extension of the collective bargaining process represents critical progress towards a strong contract. I congratulate the dockworkers from the ILA, who deserve a strong contract after sacrificing so much to keep our ports open during the pandemic. And I applaud the port operators and carriers who are members of the US Maritime Alliance for working hard and putting a strong offer on the table.”
Vice President Kamala Harris also commented on the significance of the agreement, noting the importance of fair compensation for dockworkers. “This is about fairness — and our economy works best when workers share in record profits. Dockworkers deserve a fair share for their hard work getting essential goods out to communities across America,” Harris said in her statement.
Acting Secretary of Labor Julie Su was present during the final stages of the negotiations in North Bergen, New Jersey, according to a source close to the matter. Su had previously played a key role in helping to resolve a similar labor dispute between West Coast port workers, represented by the International Longshore & Warehouse Union, and the Pacific Maritime Association. That 2023 deal resulted in a 32% wage increase for those workers over the duration of a five-year contract.
Approximately 50,000 members of the ILA, who work at ports from Maine to Texas, had been on strike since early Tuesday morning. This strike significantly impacted the movement of containerized goods in and out of the U.S., disrupting imports and exports alike. Businesses relying on the flow of goods, particularly American companies that depend on overseas markets, had already begun feeling the economic effects of the strike.
While a tentative deal has been reached, it must still be approved by the ILA members. If they reject the proposal, the strike could resume. Such rejections are not unprecedented. Just last month, union members from the International Association of Machinists (IAM) voted to reject a tentative agreement with Boeing, despite their leadership recommending approval. Since then, IAM members have remained on strike.
Though the port strike was relatively short-lived, the potential economic impact loomed large, especially as it coincided with the peak holiday season. A prolonged strike would have disrupted the flow of goods crucial to retail markets and could have had significant repercussions on the broader economy.
In fact, the Biden administration was particularly concerned about the strike’s potential to affect the economy just weeks before the upcoming presidential election. White House officials, including Biden’s chief of staff, the director of the National Economic Council (NEC), the Transportation secretary, and Su, all worked to apply pressure on the shipping industry to reach an agreement and prevent further disruption. A prolonged strike could have had a substantial impact on key economic metrics, such as October’s jobs data and fourth-quarter growth, which in turn could influence voters’ perception of the economy as they head to the polls.
The White House was acutely aware of the consequences of the strike on supply chains. On Thursday, top officials met via Zoom with shipping industry leaders to push for a resolution. During this meeting, NEC Director Lael Brainard urged USMX to make a better offer to the dockworkers. Su suggested that she could convince the ILA to extend their contract if the new offer met certain expectations. Biden’s chief of staff, Jeff Zients, also briefed the president on the latest developments.
Business groups had been advocating for government intervention, asking the administration to order striking workers back on the job. The strike threatened the supply of various goods, including fruits, liquor, and luxury items, all at a time when retailers were preparing for the holiday shopping season. Additionally, shortages of certain items could have driven prices up.
Despite these pressures, Biden refrained from using the powers available to him under the Taft-Hartley Act, which allows the president to intervene in strikes that affect national security or the economy. Instead, Biden emphasized the importance of respecting the collective bargaining process, urging both sides to reach a fair deal that reflected the industry’s recent financial success. Both Biden and Vice President Harris highlighted the record profits of the shipping industry in the aftermath of the pandemic and stressed that workers should share in the benefits of this boom.
Shipping rates skyrocketed during and after the pandemic, as supply chain issues and a surge in demand for goods increased prices. Industry expert John McCown reported that the shipping industry earned more than $400 billion in profits between 2020 and 2023 — a figure surpassing the total earnings of the industry since the beginning of containerized shipping in 1957.
Initially, USMX had offered workers a nearly 50% wage increase over the six-year contract, amounting to an average raise of $3 per hour each year. The ILA, led by President Harold Daggett, demanded a higher raise of $5 per hour annually, which would have increased wages by roughly 77% over the contract’s duration. While the Biden administration suggested a compromise of $4 per hour, the union rejected the initial $3-per-hour offer, returning to its demand of $5.
As negotiations continued, the union and the shipping companies eventually agreed to the $4-per-hour wage increase, leading to the current tentative deal. However, the strike’s future still depends on the upcoming vote by ILA members.