The politics of a potential port strike

09/28/2024 22:10
The politics of a potential port strike

The political world is keeping close tabs on a possible port strike on the East and Gulf coasts, with key swing states bracing for the economic fallout of a shutdown.

A potential dockworkers strike next Tuesday could inject uncertainty into the 2024 Presidential campaign, create a new sense of unease around the US economy, and be directly felt in key swing states from Georgia to Michigan.

Much of the uncertainty hinges on how much — and how long — any effects will be felt.

"If it lasts for more than a few days or more than a week, you're going to get massive cascading effects," Flexport founder and CEO Ryan Petersen said in a recent Yahoo Finance appearance, noting that 15% of the world's container ships could be caught up in a stoppage.

"That's a huge reduction in capacity," he added.

A shutdown in Georgia, North Carolina, and in other major ports in the East and Gulf coasts could increase Americans’ sense of economic unease if negotiations between the union and the port operator remain stalled in the coming days over a complex series of wages and automation issues.

The back-and-forth is also already playing into complex politics around unions in the 2024 race amid a concerted effort by Donald Trump to gain labor support.

Read more: What the 2024 campaign means for your wallet: The Yahoo Finance guide to the presidential election

Economic problems could also quickly spread to other parts of the country that will also have a say in the November election, like Michigan, if shipments of autos and auto parts are held up.

But shipping experts say that President Joe Biden could be drawn directly into the standoff and be forced to step in to keep workers temporarily on the job.

"We strongly suspect that, this close to the election and despite denials ahead of time, President Biden would have little choice but to step in and invoke back-to-work legislation," Bradley Saunders of Capital Economics wrote in a recent note.

Such a move could trigger an 80-day "cooling off period" and largely — but not completely — shelve the issue until after Election Day.

The White House says such a move isn't on the table but is increasingly being drawn into the standoff.

On Friday, according to a White House official, Transportation Secretary Pete Buttigieg, Acting Labor Secretary Julie Su, and Director of the National Economic Council Lael Brainard met with the port operator, the United States Maritime Alliance, to convey a message "that they need to be at the table and negotiating in good faith fairly and quickly."

That same message had been delivered to the union, they added.

SAVANNAH, GEORGIA, UNITED STATES - 2021/10/23: A truck picks up a shipping container at the Port of Savannah in Georgia. 
The supply chain crisis has created a backlog of nearly 80,000 shipping containers at this port, the third-largest container port in the United States, with around 20 ships anchored off the Atlantic coast, waiting to offload their cargo. A shortage of truck drivers to transport goods from warehouses to retailers has caused shipping containers to be backed up at the port. (Photo by Paul Hennessy/SOPA Images/LightRocket via Getty Images)

A truck picks up a shipping container at the Port of Savannah in Georgia. (Paul Hennessy/SOPA Images/LightRocket via Getty Images) (SOPA Images via Getty Images)

Will Biden step in?

Perhaps the key question at the moment, outside of the negotiations themselves between the International Longshoremen's Association and the United States Maritime Alliance, is what role the Biden-Harris administration will ultimately play.

The White House has taken a wait-and-see approach in recent weeks but has maintained that exercising executive power to delay the strike is not on the table;

"We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now," a White House official added Friday, in a reference to a 1947 law that gave the US government more power to intervene in labor disputes.

Changing course is an option that would risk angering union leaders, but multiple experts say the White House could quickly have little choice.

TOPSHOT - US President Joe Biden speaks as he hosts a reception at the Metropolitan Museum of Art on the sidelines of the 79th Session of the United Nations General Assembly in New York on September 25, 2024. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

President Joe Biden speaks in New York on September 25 on the sidelines of the 79th Session of the United Nations General Assembly. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images) (ANDREW CABALLERO-REYNOLDS via Getty Images)

"My base case would be we would get a couple of days in, and I find it difficult to believe that the Biden administration will not invoke the Taft-Hartley Act," added Michigan State University supply chain management professor Jason Miller in a recent Yahoo Finance interview.

But even if the workers are forced back onto a job without a deal, there is no guarantee that things will operate smoothly in that 80-day interim.

"We would expect some slowdowns over that period," Miller added.

Cascading economic effects

Ports from Massachusetts to Texas could be impacted by a strike, but the most in focus politically are those in Savannah, Ga., and Wilmington, N.C., that move significant cargo and sit in key swing states.

Smaller ports in Brunswick, Ga., as well as Morehead City, N.C., could also be impacted and are already drawing up contingency plans.

Tobin Marcus of Wolfe Research listed the strike as a possible "October surprise" in a recent note to clients, adding Friday that it "could become a major problem for Harris if it drags out."

But so far, it has yet to break through on the campaign trail, even with the strike looming and candidates regularly traveling close to these ports.

Donald Trump traveled to Savannah this week; he commented on the city's port but didn't weigh in on the labor unrest.

"With a world-class port and a world-class workforce, this city will soon become one of the premier export hubs anywhere on earth," Trump said as part of his manufacturing pitch.

SAVANNAH, GEORGIA - SEPTEMBER 24: Republican presidential nominee, former U.S. President Donald Trump speaks at a campaign rally at the Johnny Mercer Theatre on September 24, 2024 in Savannah, Georgia. The former president spoke to attendees on various plans including the tax code, U.S. manufacturing, and future economic opportunities if reelected a second term. Trump continues campaigning around the country ahead of the November 5 presidential election.  (Photo by Brandon Bell/Getty Images)

Republican presidential nominee, former U.S. President Donald Trump during a campaign stop in Savannah, Georgia on September 24. (Brandon Bell/Getty Images) (Brandon Bell via Getty Images)

Likewise, the Harris campaign and national Democrats have said little about a possible strike so far.

But that could change quickly if disruptions are seen and as Democrats try to convince voters they will be good stewards of the economy. The Oct. 1 deadline for a new contract also has auspicious timing, coming the same day as next Tuesday's vice presidential debate.

Another wild card is an ongoing battle for union votes between Harris and Trump with the former president making a concerted pitch to union workers and leaders to cut into the traditional Democratic strength.

Harold Daggett, the head of the dockworkers union in the middle of the current talks, has also gotten notice for his aggressive tactics as well as his willingness to invoke politics directly.

"Where's the president of the United States? He not fighting for us," Daggett said in a recent video.

He added of his negotiations with the port operators: "I'll shut them down to prove that we can beat them."

Ben Werschkul is Washington correspondent for Yahoo Finance.

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