Photo Credit:Container ships unloaded at the Port of Baltimore
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The disruptions from the expected ILA strike will impact every sector of the economy and its workers, including members of other labor unions.Even before the expected longshoremen’s strike begins, we have learned a great deal about the shortsightedness and incompetence of the modern Democrat party.
First, some background is in order:
The United States have several dozen cargo-handling seaports, divided between the West Coast, the East Coast, the Gulf Coast, and the Great Lakes.
While the Great Lakes still have a good deal of bulk shipping, the slick supply chain facilitated by modern containerization (the switch from moving cargo a pallet or crate at a time to moving it all in 20’ and 40’ intermodal containers, stacked by the thousands on containerships) has caused the lion’s share of ocean freight to skip the Great Lakes and be concentrated on the three coasts.
Almost half of the containers that the U.S. imports and exports by ocean move through the massive port complex of Los Angeles and Long Beach, with a little more distributed between the other small ports of the West Coast.
And that means that the other half of the U.S.’s container volume is spread between dozens of ports from Texas to Maine, primarily these seven giants: Houston, New Orleans, Miami, Savannah, Charleston, Norfolk, and New York.
The longshoremen – the container handlers – in all those unionized East Coast and Gulf Coast ports belong to a union known as the International Longshoremen’s Association (ILA). They operate on a six-year contract with the container ship lines and their port terminals. This contract is due to expire at midnight on Sept. 30.
The ILA walked out of negotiations early this summer, refusing management’s constant entreaties to return to the table. The ILA has announced their intention to strike on Oct. 1. Normally, the public can hope that negotiations are fruitful in the final days leading up to such a deadline, so that a strike can be averted. This time, however, since the ILA walked out, one wonders if there is even such a chance.
If the expected strike happens, that means that these ships – hundreds of them, large and small, arriving in port, being unloaded and then reloaded every day or two across these coasts – will be stuck, unable to discharge their cargo, unable to take on new cargo, unable to be productive for days, or heaven forbid, weeks, or (one struggles to conceive of it, but we must), months, until the longshoremen’s union returns to work.
To get some idea of the scale: These ships range from $50 to $150 million each to buy, and another $10 million or so per year in fuel, insurance, port charges and personnel to operate. Every day that fifty, or a hundred, or two hundred such ships are stuck in port, the shipping lines suffer a crippling loss.
This is difficult to estimate, but since we need some frame of reference, let’s use an average price of $100 million split over 20 years, plus a share of that $10 million per year in operating costs, and we see about $40,000 per ship, per day, in direct losses just from the ships being immobilized (those in the industry will know that this estimate is conservative).
But as we look at the public policy effects of such a strike, we must think much bigger than that.
Every one of these hundreds of ships is fully loaded with cargo. The cargo they carry varies from cheap to expensive, from raw materials to finished consumer goods, from simple toys and clothing to costly appliances and industrial machinery. It is therefore impossible to estimate the value of these ships in operation, but here’s a conservative estimate: A 3500 TEU vessel contains 1750 x 40’ containers. If each container just holds $50,000 worth of goods, that’s $87.5 million worth of customers’ cargo held up on that one ship. (this is likely a ridiculously low undervaluation, just to avoid the appearance of hyperbole).
So, on top of the $40K-plus per day – per ship – that a strike will directly cost the union’s employers, we must remember that it will also tie up an immense amount of cargo – billions of dollars’ worth, per port – desperately needed by the country’s manufacturing, wholesale, and retail communities. If it lasts a few days, that’s tens of billions. If it lasts weeks, that’s hundreds of billions of dollars in value in limbo, while the world waits for the 85,000 longshoremen of the ILA to get back to work.
Remember the “supply chain crisis” of 2021-2022, caused in large part by the ludicrous work restrictions of the COVID rules — such as social distancing that required the people working containers to stay six feet apart, so that everything took three times as long as it should, creating massive backlogs and bottlenecks in ports, railroad hubs, and distribution centers?
Imagine the path to such awful results being turbocharged by the sudden total closure of 36 seaports.
The ILA knows this.
They know exactly what is not just likely, but certain, to occur, if they go on strike “at 12:01am on October 1,” as they have threatened.
1. The delicate global balance of ocean containers will be immediately disrupted. The global supply chain depends on containers being turned around as fast as possible – loaded, transported, and emptied, ready for their next use. As hundreds of thousands of containers are put in limbo, the outbound cargo dependent on these empties will be immobilized as well, all over the world.
2. The manufacturing community dependent upon these containers’ contents will be immobilized as well, not immediately, but soon. Manufacturers depend on imported raw materials, components, and subassemblies, for the manufacture of their own products, and for the packaging of their own finished goods with imported accessories.
3. Related to the need for speedy turnarounds in intermodal containers themselves is a delicate balance between the chassis on which containers travel on the roads, and the railcars on which they travel by freight train. As cargo already in transport for export comes to a dead stop, the supply of railcars and chassis for more outbound freight will necessarily suffer, and exporters will find their own outbound goods stacking up in a bottleneck at their own shipping docks.
4. Eventually the consumers will start to suffer as their store shelves, from grocery stores to retailers are depleted, and as their broken-down vehicles and household appliances can’t be repaired because needed parts are “on the water, held up in transit” for weeks or months. The worst of this is that the public likely won’t feel these results until after the strike is over and damage is already irreversible.
The ILA says they are striking against the United States Maritime Exchange (USMX), the steamship lines and ports for whom they provide labor.
But in the world of the modern supply chain, that’s deceptive. Shipping lines are really just a service provider — a middleman — trying to bring cargo from seller to buyer, from exporter to importer.
What the ILA is threatening, or planning – or promising – is really an attack on American manufacturers, distribution networks, railroads, truckers, wholesalers, retailers, and consumers.
The truckers and railroad workers need cargo to transport. The manufacturers and assemblers need materials to forge and mold, parts to assemble, and a way to export their finished product.
Many, if not most, of these intended victims are union jobs, whom the ILA is happy to punish along with their employers.
The ILA is counting on Americans being unable to connect these dots and realize the amount of damage they intend to do to us all.
In his unfortunate capacity as the current occupant of the Oval Office, Joe Biden has the singular legal authority to force postponement of a strike and to force the union back to the table:
And Joe Biden has already announced that he has no intention of doing so.
Joe Biden is standing with a few union bosses at the ILA, against millions of other union and nonunion employees across the country – probably because he’s just not mentally fit enough to understand the gravity of the situation.
He and his cabinet believe this is a question of supporting union against management, but that couldn’t be further from the truth.
A century ago, an infinitely superior future president memorably declared, “There is no right to strike against the public safety by anybody, anywhere, anytime.”
President Coolidge’s historic telegram to Samuel Gompers would be just as appropriate if sent to the father-son team of Harold and Dennis Daggett, the current bosses of the ILA. But the Biden-Harris regime has neither the ability to understand the situation nor the courage to choose the right side even if they did.
John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer, and speaker. Read his book on the surprisingly numerous varieties of vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris years (Evening Soup with Basement Joe, Volumes I, II, and III), and his new nonfiction book on the 2024 election, Current Events and the Issues of Our Age, all available in eBook or paperback, only on Amazon.
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