President Joe Biden has the power to suspend the strike for 80 days for further negotiations, but the White House has said he is not planning to act.
What is the strike about?
Talks have been stalled for months and the current contract between parties expired on Monday.
The two sides are fighting over a six-year master contract that covers about 25,000 port workers employed in container and roll-on/roll-off operations, according to the US Maritime Alliance, known as USMX, which represents shipping firms, port associations and marine terminal operators.
On Monday, USMX said it had increased its offer, which would raise wages by almost 50%, triple employers’ contributions to pension plans and strengthen health care options.
Union boss Harold Daggett has called for significant pay increases for his members, while voicing concerns about threats from automation.
USMX has accused the union of refusing to bargain, filing a complaint with labour regulators that asked them to order the union back to the table.
Under the previous contract, starting wages ranged from $20 to $39 per hour, depending on a worker’s experience. Workers also receive other benefits, such as bonuses connected to container trade.
Daggett has indicated the union wants to see per-hour pay increase by five dollars per year over the life of the six-year deal, which he estimated amounted to about 10% per year.
The ILA said workers are owed after shipping firm profits soared during the Covid pandemic, while inflation hit salaries. It has warned to expect a wider strike of its members, including those not directly involved in this dispute, though the exact numbers are unclear.
The union has said it represents more than 85,000 people; it claimed about 47,000 active members in its annual report to the Labor Department.
What items will be affected by the strike?
Time-sensitive imports, such as food, are likely to be among the goods first impacted.
The ports involved handle about 14% of agricultural exports shipped by sea and more than half of imports, including a significant share of trade in bananas and chocolate, according to the Farm Bureau.
Other sectors exposed to disruption include tin, tobacco and nicotine, Oxford Economics said. Clothing and footwear firms, and European carmakers, which route many of their shipments through the Port of Baltimore, will also take a hit.
Imports in the US surged over the summer, as many businesses took steps to rush shipments ahead of the strike.
“I don’t think we will see immediate, significant economic impacts…but over the course of weeks, if the strike lasts that long, we can begin to see prices rise and for there to be some shortages in goods,” said Seth Harris, a professor at Northeastern University and a former White House adviser on labour issues.
What will the economic impact be?
More than a third of exports and imports could be affected by the strike, hitting US economic growth to the tune of at least $4.5bn each week of the strike, according to Grace Zemmer, an associate US economist at Oxford Economics, though others have estimated the economic hit could be higher.
She said more than 100,000 people could find themselves temporarily out of work as the impact of the stoppage spreads.
“This is really a trigger event, one that will see dominoes fall over the coming months,” said Peter Sand, chief analyst at ocean freight analytics firm Xeneta, warning that the stand-off also has the potential to push up wider shipping costs.
That would hit consumers and businesses which tend to rely on so-called “just-in-time” supply chains for goods, he added.
