Texas’ economy could take a hit if Houston dockworkers’ strike persists

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Port Houston dock workers could go on strike at midnight Tuesday, a move that could have damaging impacts on the local and state economy, largely depending on how long the walkoff lasts.

The U.S. Maritime Alliance, which represents employers at East Coast and Gulf Coast ports, and the International Longshoremen’s Association, which represents 45,000 dock workers across 36 ports, have reached an impasse in labor contract negotiations. The longshoremen’s current contract expires Monday night, and the union has voted to authorize a strike if a deal is not reached before then.

Longshoremen are the workers who load and unload shipping containers from cargo ships. A strike would mean cargo on ships would remain on ships and cargo on land would remain on land until the longshoremen return to work.

That squeeze on the supply chain could mean higher prices for everyday items like fresh produce, clothing, shoes, car parts and building materials, experts say.

Nationwide, the United States could lose nearly $5 billion a day in imports and exports from a strike, with $92 million coming from the Houston region alone, said Margaret Kidd, program director for the University of Houston’s supply chain and logistics technology program.

A prolonged longshoreman strike across half the country, Kidd said, “would be our Armageddon.”

A strike would force the port to stop all container handling operations at its two container terminals, Barbours Cut and Bayport, according to a Wednesday news release from the port. Operations at the port’s general cargo and multi-purpose facilities also would be impacted, according to the release.

The port is not involved in the labor contract negotiations.

The longshoremen are seeking higher wages and protections from automation.

"My ILA members are not going to accept these insulting offers that are a joke considering the work my ILA longshore workers perform, and the billion-dollar profits the companies make off the backs of their labor," ILA International President Harold Daggett wrote in a statement last week. “The blame for a coast-wide strike in a week that will shut down all ports on the Atlantic and Gulf Coasts falls squarely on the shoulders of USMX."

In its own statement Monday, the U.S. Maritime Alliance said the two sides have reached an impasse.

"Despite additional attempts by USMX to engage with the ILA and resume bargaining, we have been unable to schedule a meeting to continue negotiations on a new Master Contract," the statement said. "Our goal remains the same -- we want to bargain and avoid a strike, but time is running out if the ILA is unwilling to return to the table.”

It is unclear how many longshoremen union members work at the Port of Houston and could be on strike. A Port Houston spokesperson said she did not know and referred the Landing to the union. The ILA declined to comment further, citing ongoing negotiations.

A 2022 study prepared by Martin Associates for the Port of Houston found more than 1.5 million jobs are supported by Port activity, with the port holding nearly $440 billion of total economic value — more than 18% of the state’s GDP.

Ships arriving in Houston are unloaded onto trains and trucks before they are shipped across the city and the surrounding region.

Houston is unique in the world of maritime trade, Kidd said, with its port being the largest in the country in terms of tonnage, and the fifth-largest in terms of containers.

A strike by the port’s longshoremen would not affect most oil, gas and liquid chemical exports because they are not transported in the shipping containers longshoremen are needed to move, said Jesse B. Thompson III, a senior business economist at the Houston Branch of the Federal Reserve Bank of Dallas.

“It’s a mixed bag for Houston's core industries,” Thompson said. “Oil and gas will be fine, but chemicals, there could be some issues.”

The strike would halt the transportation of anything that moves in a container, including fresh produce, auto parts, manufactured components and, most crucially for Houston’s export economy, plastic resins, Thompson said.

Port Houston is the nation’s leader in resin exports, making up about 59% of the United States’ total market.

The last time longshoremen went on strike was in 1977, for 45 days.

Each day of a longshoreman strike would require between four to six days of catchup work to get operations back on track, Kidd said. That means a two-week-long strike could back up port operations across the country into 2025.

Impacts would not be felt immediately because importers and exporters have been aware of the strike possibility for much of the year, Thompson said.

National retailers have been importing products into the country for back-to-school and the holiday season earlier than previous years in an effort to prepare for the strike, according to the National Retail Federation.

This year, Port Houston surpassed the 2 million Twenty Foot Equivalent Unit — the standard measure for cargo containers — earlier than ever. The first six months of the year saw a 13% increase in imports over the first six months of 2023, according to Port Houston.

That early preparation should mitigate some consumer cost increases associated with a supply chain backlog, but it is unclear how long that buffer will last, Thompson said.

“A lot of people in the buy and trade side of moving containers around have had all year to get ready for this,” the economist said. “I’m sure there’s been some preparation, but I don't have any way to quantify that.”

The port is encouraging companies to pick up their imports as soon as possible because anything in the yard at close of business on Monday will be unavailable until the strike ends.

Despite the potentially catastrophic consequences, Kidd said she thinks any longshoreman strike, if not avoided entirely, would be short-lived. It is more likely the parties will come to a resolution on their own, or with federal government intervention, she said.

Although the federal government has declined to intervene up to this point at the request of labor organizers, Kidd said the Biden administration would have an obligation to avert the level of international economic crisis that would be created by a prolonged strike.

“You can’t destroy a national economy,” Kidd said. “Given a prolonged strike, it would just be irresponsible if (Biden) didn’t step in.”

This article first appeared on Houston Landing and is republished here under a Creative Commons license.

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