Port strike boosts pressure on Biden, Harris

President Biden and Vice President Harris may find themselves in an increasingly difficult position the longer the International Longshoreman Association (ILA) strike on the East and Gulf Coasts continues. 

Biden could put workers back at the docks by invoking the Taft-Hartley Act, but doing so would anger progressives and labor weeks before an election where Harris needs strong turnout from the Democratic base. 

Yet if the strike does start pinching the economy in the next couple of weeks, it risks undoing some of the progress Harris has made in polls on perhaps the most critical issue in the election.

Shipping and logistics experts told The Hill that the timing of when exactly prices could start going up in the economy as a result of the strike were hard to know.

“The things that are going to be impacted first [are] really the perishable stuff, the flowers and the food and the pharmaceuticals – the type of things that are shipped in refrigerated containers and have pretty narrow parameters within which they are good,” Kent Gourdin, director of the global logistics and transportation program at the College of Charleston, told The Hill.

The Freightos Baltic Index is down around $4500 with just 1 percent volatility, having eased to that level from $5,500 in August.

For consumer goods prices, Gourdin said he thought price impacts could “be a little while because so many of the large retailers … had anticipated this and started stocking up months ago.”

As the strike continues and price pressures travel further upstream toward the production end of the pipeline, the political ramifications for President Biden and Vice President Harris are likely to become more acute.

Former President Trump has long held an edge on the issue of the economy, which is particularly resonant for Americans after the post-pandemic inflation, but Harris has been closing the gap.

Harris was behind Trump by 3 percentage points with American adults polled by Marist College on which candidate would be better for the economy. Biden trailed Trump in June in the same poll by 9 points. Harris was ten points closer to Trump in a recent Fox News poll relative to Biden.

Overall economic recovery from the strike, spanning price effects and supply chain renormalization, takes about five times as long as the duration of the strike itself, Gourdin said.

Sherman Robinson, a research fellow emeritus, with the Peterson Institute for International Economics (PIIE) also told The Hill it was “hard to say” when exactly the strike could translate into increased container costs.

On the negotiations front, Biden said Thursday that some progress is being made.

“I think we're making progress on that,” he told a reporter, adding that “we’ll find out soon” how much headway is being made.

Biden and Harris have been calling on the U.S. Maritime Alliance (USMX) to pony up for the dockworkers.

“I have urged USMX, which represents a group of foreign-owned carriers, to come to the table and present a fair offer to the workers of the International Longshoremen’s Association that ensures they are paid appropriately in line with their invaluable contributions,” Biden said in a Tuesday statement.

Longshoremen “deserve a fair share of these record profits,” Harris said earlier this week, as reported by The Hill.

Greg Regan, president of the Transportation Trades Department of the AFL-CIO, who said he was authorized to speak on behalf of the ILA, told The Hill that the two sides have been exchanging informal offers.

“They perhaps haven’t had a formal sit-down bargaining session. That doesn’t mean they haven’t been exchanging offers as we saw was reported [on Tuesday] even, or the day before the strike – that … both sides had moved closer together. They’re still talking,” Regan said on Wednesday.

If they can’t agree and make a deal, Biden has recourse to use a powerful labor law called the Taft-Hartley Act ,in which he could declare a national economic emergency.

Doing so sets off a legal process delivering an injunction that orders workers back to work while the negotiations continue. This could result in less leverage for workers in the negotiations, and the 80-day “cooling-off period” involved would likely have its own economic implications.

Cornell University director of labor studies Arthur Wheaton told The Hill earlier this week that because the current ILA strike is an economic strike — meaning a strike over compensation as opposed to unsafe labor conditions — U.S. labor law allows workers to be replaced if they don’t comply with legal proceedings, though he cautioned that could have negative impacts upon the industry.

Negotiations between the ILA and USMX could be complicated by the nature of the USMX consortium, which multiple experts described in terms that run against traditional market dynamics.

Charleston's Gourdin described current shipping alliances as muddy.

“It has gotten muddied a little bit as these individual companies have – ‘merged’ is the wrong word – entered into these co-operations. Basically, they’re competitors. What’s happening is that the individual lines are now sharing a lot of space and a lot of routes that they didn’t used to before.”

USMX itself has recognized the intertwining of various aspects of its business, with contractual implications for labor.

“Reaching an agreement will require negotiating – and our full focus is on how to return to the table to further discuss these vital components, many of which are intertwined. We cannot agree to preconditions to return to bargaining – but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns,” the alliance said in a Wednesday statement.

Former President Trump has also sounded some friendly notes toward union workers.

“American workers should be able to negotiate for better wages, especially since the shipping companies are mostly foreign flag vessels, including the largest consortium One,” he said in a Tuesday statement.

Automation is a major concern for longshoremen, some of whom have described the categorical reliance on it as “naïve.” Comparing some Chinese ports with U.S. ports, PIIE's Robinson told The Hill there was a legitimate need to “up the efficiency” of U.S. ports.