Longshoremen are expected to drop their cargo hooks Tuesday, potentially freezing activity at some of the U.S.'s busiest ports.
What Happened: According to the New York Times, a union showdown on the East and Gulf coasts with their employers could halt billions of dollars worth of goods, potentially complicating shopping ahead of the holidays.
The International Longshoremen's Association (ILA) hasn't orchestrated a strike this big since 1977, but its got leverage this time. Recent labor victories by big unions such as the Teamsters and the United Auto Workers (UAW) have set a high bar.
Longshoremen are now looking for their slice of the pie.
In addition to demanding a pay raise, longshoremen are also wary of labor-saving tech creeping into their workspace.
With a strike potentially costing the economy billions per day, President Joe Biden could step in using a 1947 law to force the longshoremen back to work.
But Biden, who supported the UAW strike last year, said Sunday he would not intervene with the longshoremen strike.
The United States Maritime Alliance, representing the employers, is locked in a months-long standoff with the ILA over wages and benefits.
The union is asking for a $5-an-hour raise for each of the next six years. This would bring their top hourly rate to $69 — a significant bump from the current $39 an hour.
Compare that to their West Coast counterparts, who will be pulling in $60.85 an hour by 2027, and it's easy to see why the ILA feels shortchanged.
Why It Matters: The ILA's 47,000 members handle three-fifths of U.S. container traffic.
Many businesses, fearing a potential strike, have scrambled to get goods through the ports before Tuesday.
With some cargo still stranded at sea, delays are inevitable. The backlog could reportedly take weeks to clear, even if the strike is brief.
Various distributors, including MHW Ltd., fear the strike could affect the Thanksgiving holiday. MHW chief operating officer John Wrenn told the New York Times that sales "will just be lost because products will not be on the shelves."
A different union operates West Coast ports, leaving them unaffected.
Observers say trucking goods from the West Coast to the East is too expensive to serve as a workaround.
The ILA has said they won't disrupt work on cruise ships.
ETFs To Watch:
- Breakwave Dry Bulk Shipping ETF (NYSE:BDRY): This ETF is the first to focus on dry bulk shipping. Launched in partnership with ETF Managers Group, the Breakwave holds near-dated futures contracts on various dry bulk indexes.
- SPDR S&P Transportation ETF (NYSE:XTN): Tracks the transportation sector, including shipping companies and logistics providers like FedEx and UPS. A strike would disrupt their operations.
Investors can gain exposure to cruise stocks via Vanguard Mid-Cap Growth Index Fund ETF (NYSE:VOT) and iShares Russell Mid-Cap ETF (NYSE:IWR).
Now Read:
- Boeing Should Pick Up Aircraft Production Soon After Strike End, Analyst Says
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