BUSINESSES had hoped that US President Joe Biden would swiftly halt the strike at US east and Gulf coast ports by invoking the Taft-Hartley Act. Those hopes were dashed on Tuesday when Biden issued a statement that was very pro-International Longshoremen’s Association and anti-foreign carrier.

“Collective bargaining is the best way for workers to get the pay and benefits they deserve,” said Biden, telling the United States Maritime Alliance (USMX), “which represents a group of foreign-owned carriers” to “present a fair offer” to the ILA.

Biden said that during the pandemic, ocean carrier profits “grew in some cases by 800% compared to their profits prior to the pandemic”, leading to high executive compensation and dividends, and that “it’s only fair” that ILA workers “see a meaningful increase in their wages”.

Carriers have announced congestion surcharges beginning in the coming days and weeks. Biden warned, “My administration will be monitoring for any price-gouging activity that benefits ocean carriers, including those on the USMX board.”

Regarding the strike coinciding with urgent relief efforts for victims of Hurricane Helene in the southeastern US, Biden squarely blamed carriers for any potential fallout, not the ILA.

“As our nation climbs out of the aftermath of Hurricane Helene, dockworkers will play an essential role in getting communities the resources they need. Now is not the time for ocean carriers to refuse to negotiate a fair wage for these essential workers while raking in record profits,” he said.

More carrier blame in White House press briefing

White House press secretary Karine Jean-Pierre was peppered with questions about the strike during a briefing on Tuesday. She provided further colour on Biden’s earlier statement.

Jean-Pierre repeatedly blamed the USMX, stating that the employers’ group needs to offer a “fair deal for workers”, effectively confirming that the administration believes the 50% salary raise offered by USMX is not fair.

She also repeatedly said the package for the ILA needs to “meet the level of their peers”, which seems to suggest that the administration believes the new ILA contract must match the package negotiated by the International Longshore & Warehouse Union at US west coast ports last year.

Jean-Pierre stressed the importance of union member wages and benefits, but refused to answer questions on the administration’s position on ILA demands for automation limits, which may imply that carriers have more wiggle room on this front.

When pressed several times on whether Biden would ever invoke the Taft-Hartley Act, even in the case of an extended strike, Jean-Pierre was adamant that Biden had not changed his position. “The message has been very clear. We have not used Taft-Hartley and we are not planning to.”

Who’s going to the ‘table’?

The two sides are not yet even sitting across from each other in the same room at the so-called “table”.

The ILA broke off formal negotiations in June. USMX filed a complaint with the National Labor Relations Board last week “due to the ILA’s repeated refusal to come to the table”.

The ILA countered that it has had multiple (non-at-the-table) communications with USMX, but said wage offers from USMX have been too low.

Jean-Pierre blamed the USMX, urging it to “come to the table” with a better offer, despite the fact that the USMX has been willing to go to the table, and from what the ILA has said, the union won’t come to the table until it gets an acceptable wage offer first.

But USMX is sticking to its latest non-table-worthy offer.

In a release late Tuesday after the Biden statement and Jean-Pierre’s press briefing, USMX maintained, “our current offer of a nearly 50% wage increase exceeds every other recent union settlement, while addressing inflation and recognising the ILA’s hard work to keep the global economy running.”

The USMX offer has already been deemed too low by both ILA and the Biden administration, thus the stalemate continues.

Ship queues already building

The strike has just begun, but the ship queues off US east and Gulf coast ports are already mounting and will escalate quickly as more vessels arrive. Based on the number of inbound vessels, the logjam could be double the levels seen during the pandemic by next week.

Ship position data showed 30 containerships already anchoring or loitering off the ports as of late Tuesday.

According to data from eeSea, 202 containerships with aggregate capacity of 1m teu are either already at the coastlines or due to arrive in the next seven days.

During the supply chain crisis, the queue off the US east and Gulf coasts maxed out at just over 100 containerships in August-September 2022.

Liner stocks pull back

Meanwhile, container liner stocks did not behave as expected Tuesday. The typical pattern is for shipping stocks to rise as disruptions increase. In this case, share prices rose in the period prior to the ILA deadline, then pulled back the day the strike began.

Clarksons Securities analyst Frode Mørkedal speculated that the drop “probably reflected mixed market sentiment regarding the strike’s long-term impact and what’s currently priced in”.

Other theories on the pullback have included profit-taking and “buy the rumour, sell the news” trading.

Zim, the most heavily traded liner equity in the world, fell as much as 9% early Tuesday before closing down 5%. Zim’s adjusted share price had surged by 59% between July 19 and Monday’s close.

Shares of Matson, which hit an all-time high on September 25, fell by as much as 3% in early trading Tuesday and closed down 1%.

Among the European-listed liner stocks, which are much more thinly traded than their US counterparts, Maersk declined 5% on Tuesday. It had been up 18% between September 10 and Monday’s close. Hapag-Lloyd declined 2% Tuesday after rising 22% between September 9 and Monday.