U.S. dockworkers strike, halting half the nation's ocean shipping

U.S. East Coast and Gulf Coast dockworkers began their first large-scale strike in nearly 50 years on Tuesday, halting the flow of about half the country's ocean shipping, after negotiations for a new labor contract broke down over wages.

The strike blocks everything from food to automobile shipments across dozens of ports from Maine to Texas, a disruption analysts warned will cost the economy billions of dollars a day, threaten jobs and potentially stoke inflation.

President Joe Biden and his administration have repeatedly said they will not use federal powers to end the strike, and on Tuesday pressured dockworker employers to bump up their contract offer to land a deal.

The two sides are talking to each other, but there was no active bargaining late on Tuesday and the strike appeared to be headed into a second day, a person briefed on the talks said.

The International Longshoremen's Association union (ILA), which represents 45,000 port workers, had been negotiating with the United States Maritime Alliance (USMX) employer group for a new six-year contract ahead of a midnight Monday deadline.

Strike puts labor-friendly Biden in awkward position

The ILA said in a statement it shut down all ports from Maine to Texas at 12:01 a.m. ET (0401 GMT) after rejecting USMX's final proposal, adding the offer fell "far short of the demands of its members to ratify a new contract."

The ILA's leader, Harold Daggett, has said employers such as container ship operator Maersk and its APM Terminals North America have not offered appropriate pay increases or agreed to demands to stop port automation projects that threaten jobs.

"We are prepared to fight as long as necessary, to stay out on strike for whatever period of time it takes, to get the wages and protections against automation our ILA members deserve," Daggett said on Tuesday.

USMX said in a statement, "Our current offer of a nearly 50-percent wage increase exceeds every other recent union settlement, while addressing inflation and recognizing the ILA's hard work to keep the global economy running."

Daggett said the union is pushing for more, including a $5 per hour raise for each year of the new six-year contract.

The White House weighed in, saying it was time for USMX to negotiate a fair contract for workers.

"Shippers have made record profits since the pandemic, and, in some cases, have seen profits grow in excess of 800 percent," White House Press Secretary Karine Jean-Pierre said, referring to a boom in shipping demand since the COVID-19 pandemic.

"It's only fair that workers who put themselves at risk during the pandemic to keep ports open see a meaningful increase in their wages as well."

The dispute is wedging labor-friendly Biden into a virtual no-win position, with Vice President Kamala Harris in a razor-thin race for the White House with Republican former President Donald Trump in the November 5 election.

Trump on Tuesday blamed the strike on inflation, which he said was caused by the Biden-Harris administration.

"Everybody understands the dockworkers because they were decimated by this inflation, just like everybody else in our country and beyond," Fox News Digital quoted Trump as saying in an interview.

Strike costs American economy roughly $5 billion a day

The strike, the ILA's first major stoppage since 1977, is worrying businesses that rely on ocean shipping to export their wares or secure crucial imports. It affects 36 ports, including New York, Baltimore and Houston, that handle a range of containerized goods from bananas to clothing to cars.

The walkout could cost the American economy roughly $5 billion a day, JP Morgan analysts estimate.

French shipping group CMA CGM, the world's third-largest container shipper, on Tuesday issued a force majeure notice over the strike, and said it may charge additional shipping fees for delayed vessels.

The National Retail Federation called on Biden's administration to use its federal authority to halt the strike, saying the walkout could have "devastating consequences" for the economy.

Republicans, including Virginia Governor Glenn Youngkin, also called on Biden to end the strike, warning of its impact on the economy.

The U.S. Department of Agriculture said on Tuesday it does not expect significant changes to food prices or availability in the near term.

Grocery chain owner Ahold Delhaize also said it expected minimal short-term impact on its supply chain.

(With input from Reuters)