Analysis: Biden, ILA score wins in port strike, but larger issues remain

“Those were our marching orders,” said a source familiar with the employers’ thinking.

It was a remarkable win for Biden, who showed how a veteran pol can choose a side and then put his thumb on the scale to manipulate the outcome. It’s an even bigger victory for Democrats who saw a potential major controversy neatly removed just weeks ahead of a toss-up general election without alienating organized labor.

The timeline of the settlement was only a trifle shorter than was outlined here, but the Very Bold Take that the union would “get paid” amid a roaring economy was spot-on. 

Biden’s stance further emboldened ILA President Harold Daggett, who in the run-up to the strike had grown increasingly militaristic in his rhetoric, literally framing the labor dispute as a “war,” and insisting that the union — and not the public entities that manage the ports — “own the docks.” 

The end result was a surprising compromise for Daggett, who insisted in no uncertain terms the union would stand firm on its demand for a raise of $5 per hour per year over the six years of the master contract after rejecting the latest USMX offer of $3. The employers offered a performative push-back, saying it wouldn’t bargain under the union’s pre-conditions, but it turned out to be so much public posturing as the sides settled on what looks like a textbook negotiation.

Make no mistake: Daggett and the ILA were a lightning rod for criticism, initially demanding a pay hike north of 70% while essentially taking billions of dollars’ worth of the U.S. economy hostage as people fretted over rising prices. The union’s insistence that automation be kept out of the ports had a peculiar weird resonance where AI, self-driving trucks and rockets are part of everyday life. 

Daggett also looked like the 70-something boomer that he is, thinking you can wage a successful battle with press releases and videos when people are coming at you with social media — and death threats — over your own pay, your past legal issues, your (former) yacht, your Bentley and your big house with a pool. 

But if something good came out of all this besides a huge union pay raise, it was the public conversations surrounding the circumstances of the strike. People considered it unthinkable that a few thousand workers could choke off the economy, and that the port system could be so broken nearly 70 years after the dawn of commercial containerization.

There was much wringing of hands and seemingly thoughtful analysis over how much less efficient U.S. ports were than their (highly automated) brethren in Asia and Europe. But in reality efficiency is dictated mostly by port design and utilization. That is to say, number of berths and amount of storage space for containers. “Port labor productivity goes down for basically the same reason that traffic flow in cities decreases when streets are highly congested,” says Alan Erera, who directs the Center for Global Transportation within the Supply Chain and Logistics Institute at Georgia Tech. “Automation would not affect the rankings [of seaport efficiency].”

Erera asserts that the biggest gains in efficiency will come not from automating current port designs but from capacity-improving redesigns that rely on automation and would require major infrastructure investments. And that’s a giant question mark where expensive public projects are concerned, particularly for older ports in urban centers where available land is at a premium or non-existent.

The strike also shone a light on the ocean carriers, a de facto cartel all headquartered outside the U.S. that controls global shipping rates and seemingly answers to no one. This was somewhat alarming to the public, most of whom don’t know the difference between an IBC and IPI. 

Similarly, the fact that so much vital trade originates outside the U.S. added more fuel to the growing populist debate over tariffs, protectionism, onshoring and reindustrialization — the very essence of our identity as a country.

In short, it took the ILA three days to get the historic raise it was looking for; solutions to the foundational issues that got us here will be far longer in coming.

Find more articles by Stuart Chirls here.

Related coverage:

Frequently asked questions: The ILA port strike

Biden scolds ocean carriers for not paying dockworkers ‘fair’ wages

What shippers need to know about the port strike and cargo insurance