Opinion: Who Are the Longshoremen Really Striking Against?

By John F. Di Leo, Opinion Contributor

36 seaports, all up and down the United States’ Atlantic and Gulf coasts, suddenly stopped working, Tuesday morning at midnight. The International Longshoremen’s Association has gone on strike for the first time since 1977.

Now, everyone knows what a strike is. The laborers leave the factory and start marching with picket signs, while union negotiators hammer out a new contract with their employers’ management.

Either you’re on the side of the workers, or you’re on the side of the management, right? Isn’t that always how strikes are, both to those involved and to those observing from outside?

Well, actually, no. Not quite. Not in this case.

The longshoremen of the ILA aren’t all in the same place, and they don’t all work for the same company. Their union is in fact something of a relic of an earlier time, and their union’s Luddite-inspired efforts to turn back time are among the foundations of our current crisis.

For thousands of years, international trade has moved by ship. Across the Mediterranean, across the English Channel, across the Indian Ocean, and more recently, up and down the Atlantic and Gulf coasts of the Americas, ships have sailed from port to port, carrying all kinds of freight, from food and drink to clothing and shoes, from raw materials to finished goods.

The people who sail the ships are the sailors, or seafarers – the ships’ crewmen. And the people who load and unload the cargo at the ports are called longshoremen.

Long ago, longshoremen set portable ramps at the docks and carried barrels or crates up and down between the ship and the shore. Modernization has eased this manual labor, providing lift trucks, gantry cranes, and all sorts of related equipment, often customized to the specific cargo being loaded or unloaded.

Today’s longshoremen operate this equipment, moving thousands of automobiles on and off car carriers, using cranes or transporters to lift huge equipment on and off breakbulk ships, and using massive pumps, hoses, and conveyors to load and unload silos worth of grain, ore, and coal transported by bulk vessels.

But the lion’s share of today’s international cargo, the pallets of boxes or drums in which most wholesale and retail goods are packaged, moves in intermodal shipping containers.

These huge steel boxes come in just a few standard sizes – 20’, 40’ or 45’ lengths – and can be swung on or off the ship by powerful cranes, stacked five or ten high for transoceanic seafreight, or swung, one at a time, onto truck chassis and railcars for overland transit. Each railroad train on land can hold a hundred or more containers; each enormous containership can hold thousands and thousands of them in a single trip, in hundreds of neat stacks like an enormous Lego project.

This process, known as intermodal containerization, took off shortly after World War II (the invention of the brilliant Malcom McLean, founder of the appropriately-named Sea-Land Service), and by the 1970s was the dominant method of cargo transport all over the world.

No more are the world’s longshoremen breaking their backs lugging hundreds of pounds of crates and barrels back and forth, hundreds of times per day, up and down a wobbly deck or ramp – at risk of falling off a pier, or being crushed by falling cargo, as their forefathers suffered through the centuries. There are still risks, of course; a crane can malfunction, an operator can still trip and fall. No job is perfectly safe. But the risks are infinitely lower today than a century ago.

The longshoremen work for the ports, or for terminals that rent space from the ports. The dozens of containership lines, and hundreds of other cargo shipping lines, then contract with the terminals for space and services. So, these longshoremen have no real direct relationship with Maersk, Mediterranean Shipping, Hapag-Lloyd, or the rest of the shipowners, except at contract time. The longshoremen provide a service, as employees of the terminals. And yet, due to the deranged system in our unionized ports, the longshoremen’s union contracts primarily with the shipping lines instead of just with the port terminals they work for.

And now it gets particularly odd.

The terminals at the ports have relatively stable operations. They work the ships that come in, from car carriers to bulkers, from smaller containerships to the giants that don’t even fit in the Panama Canal. The fees they charge, theoretically at least, ought to be based on the number of ships they serve, and those ships’ size and complexity.

But the shipping lines themselves are anything but stable. The transition to the intermodal container came at a huge cost: the shipping lines must somehow manage the repositioning of all those millions of empty containers, so that there’s always an empty one to load wherever in the world there is cargo to pick up. Sometimes the shipping lines guess well and manage to have just enough empties where they are needed; often, they have to turn down shipments because of a lack of containers. Even though there’s plenty of room on these enormous ships, the business is all about the positioning of empties now, which has an enormous pricetag. In many trade lanes, carriers move a third of their containers empty across the ocean, in the hope that the price they can command for carrying them full in one direction will make up for the cost of having to carry them empty for free in the other.

The steamship lines therefore live in a roller coaster economy; for a year or two they will make huge profits, which must tide them over when there’s a year or two in which they lose their shirts.

A year ago, in the midst of a global freight recession, ocean carriers were struggling to keep afloat, only able to charge the lowest rates in five years, despite inflation in every other industry.

· But then the Houthis shut down the Suez Canal, requiring carriers in the Asia-Europe trade lanes to go all around Africa.

· And then the Panama Canal almost shut down, when a severe drought limited the number of ships that could use the locks to a third or even a quarter as many as usual, necessitating carriers in these lanes to go around South America instead of cutting through in the middle.

Both of these massive additional expenses necessitated raising rates to cover the higher costs; prices doubled, then tripled for a while, at least until Panama was able to return to its normal volume.

But those aren’t the shipping lines’ only challenges. There have been three other particularly painful hits to the shipping industry in recent years:

· During President Trump’s first term, American industry finally realized the dangers of its overdependence on Mainland China as a source of not only finished goods but raw materials and components as well. Suddenly – finally – thousands of companies began reshoring projects, moving their supply base to other Asian countries, to Eastern European countries, to Latin American countries, and sometimes even to USA sources. It’s a wonderful and welcome improvement, but after decades of stability, this changed the dynamics of equipment positioning and service routes for the steamship lines. There’s a cost to that.

· Also in the late 2010s, the shipping lines were forced by a program called IMO-2020 to totally redo the propulsion system on every single ship, either by changing out their engines to burn different fuel or by installing costly “scrubbers,” in an effort to slightly reduce the amount of sulfur dioxide they produce, at a cost of half a million dollars or more (sometimes much more) per ship. The carriers are still just getting over that huge expense, forced on them by the International Maritime Organization.

· Finally, a terrifying new risk has reached the shipping industry that they never encountered before. This new kind of cargo – the huge lithium batteries for electric vehicles – is compromised by heat, cold, and water. There’s a lot of water in an ocean. A single container full of EV batteries can catch fire and shut down a port (as occurred just last week in both Los Angeles and Montreal). A single EV car can catch on fire while a car carrier ship is at sea (as occurred in 2023, sinking an entire ship in the North Sea). The shipping lines are just beginning to tackle the challenge of financing and insuring against this brand new risk.

With all these unprecedented costs, the steamship lines have been taking in a lot of money, yes – but they’re setting aside so much of it, to handle these overwhelming costs that are completely out of their control.

The ILA, however, doesn’t care about any of that. They are focusing on one single fact: the fact that the carriers have raised prices this year. So they demand a commensurate wage increase, based on the theory that if the shipping lines are taking in more money, then the longshoremen – who absorb absolutely none of the above costs and risks (with the possible exception of the proximity to EV batteries) – insist that they deserve the same increase.

They don’t. It’s a ridiculous assumption.

Note that the carriers lose billions of dollars most years, then have profits in the billions in some years. The longshoremen aren’t offering to share in the losses during bust years, but they demand an outrageous 77% increase today, just because the contract happens to coincidentally be up during one of the carriers’ few profitable years.

The longshoremen have benefited from modernization; while the ports don’t need as many people today to handle all this freight, it’s also a much safer job than it was in their grandfathers’ time. Life has gotten better for the longshoremen.

And they are paid well, enormously well. The press reports a base salary of about $81,000/year, but due to overtime opportunities and after-hours pay (ships arrive 24/7, and workers are compensated for the inconvenience), the typical union longshoreman already earns well into the six figures, with $200,000 per year a common take-home total, especially at the busier ports.

Two more points worth noting:

· Those of us in America’s bigger cities sometimes forget the vast differences in cost of living between some parts of the country and others. While the ports of Boston, New York and Baltimore are in relatively expensive areas, most of our ports are not. With lower tax rates and housing prices in the southern states, imagine the above salary range for someone living in the port cities of Charleston, Savannah, Mobile and New Orleans. This is theoretically a blue collar union job, but it pays better than most white collar positions outside the executive suite.

· The ILA is run by a father and son team, Harold and Dennis Daggett. Harold Daggett’s salary and compensation as President of the union was published recently. This 76’ yacht-owning, luxury Bentley-driving union boss was paid $901,000 last year – yes, you read that right – as the head of both the national union and his local. And to keep it in the family business, he made sure his son is the union’s executive vice president.

In the final analysis, though, it’s a strike. And the public has to choose between the two sides.

So, that’s the question. Do we believe that the union or the carriers have the moral high ground?

To answer this question, perhaps we should consider who they are really striking against.

By tying up 36 seaports along the Atlantic and Gulf coasts, the ILA is either immediately or gradually shutting down the following victims:

· The workers on the many east coast railroad and trucking networks that serve these ports and their customers,

· The workers at the countless distribution centers that receive and onforward the finished goods imported by them,

· The workers in the countless assembly lines and other manufacturing plants all over the country that are waiting for these imports, and who will be laid off for lack of parts and materials as the strike goes on and assembly lines are switched off,

· The retailers all over the country who will suffer rapidly depleted shelves as their normal daily imports begin to slow and then stop in the days or weeks to come, requiring cutting of hours for retail clerks and support staff,

· The laborers at American manufacturers who export American goods to the outside world, who will soon run out of room in their own plants as they can no longer obtain containers for shipping out their product, causing them to shut down production until exporting is again possible.

· And everyone else in every industry dependent upon the dependable nonstop cargo flow through our nation’s seaports.

That’s just a sample. There are countless more victims in this strike. It is estimated that the strike will cost at least $5 billion per day, and it will take at least a week to recover for every day that the shutdown lasts. But those numbers are too big; it’s hard to process figures like that.

Better to think about the direct effect on people, the hardworking Americans – many of them union too, by the way – who work for all the logistics companies, retailers and wholesalers, and factories big and small, that depend on our seaports functioning properly. Millions will suffer reduced hours or layoffs. Millions will suffer the personal losses that a reduced paycheck for a month or two inevitably causes. How many people can afford such a disruption, especially now, with inflation through the roof, especially through no fault of their own?

These are the people whom the longshoremen are striking against. They demand a 77% pay increase, on top of an already generous compensation package, and they demand an end to the modernization from which the entire world benefits, including themselves.

They really aren’t striking against wealthy foreign ship owners at all. They aren’t striking against nameless, faceless foreign fat cats in a skyscraper boardroom, however they may portray it to their gullible audiences.

They are striking against you and me.

They are striking against their own neighbors, and relatives, and friends.

They are striking against the American economy, at a time when we so desperately need a smooth and dependable supply chain, mere hours after a crippling hurricane has devastated huge swaths of the American southeast.

They are striking against us all, and the greatest slap in the face is that the Biden-Harris regime chooses to side with the $901,000/year union thug, rather than the 300 million American constituents who will suffer from this travesty.

Copyright 2024 John F. Di Leo