Another potential port strike is looming. Here’s what to know about the January talks.

Another possible U.S. port strike is looming later this month, which may seem like deja vu given it’s only been three months since a work stoppage stemming from a labor dispute closed every major East and Gulf Coast port in October.

While that strike ended after three days with a tentative deal between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) that addressed some key issues, the sides face a January 15 deadline to resolve other concerns. 

With the union and USMX resuming negotiations on Tuesday, January 7, the specter of another port shutdown is heightening concerns among economists, businesses and policy experts. To be sure, the dockworkers and port operators could reach an agreement ahead of the deadline, which occurs just days before President-elect Donald Trump will be inaugurated for his second term. 

But if the union and the USMX are unable to reach a deal, more than 20,000 dockworkers could go on strike in mid-January, halting activities at ports from New York to Houston and potentially reducing the nation’s economic activity by as much as $7.5 billion each week.

“[A] failure to reach an agreement and an extended strike similar to the one seen in West Coast ports in 2002 would begin to have a material financial effect on East and Gulf Coast ports,” David Kamran, assistant vice president at Moody’s Ratings, said Monday in an analysis of the simmering labor battle. “An extended strike would not only have an adverse effect on ports but could also impact the retail sector and shipping companies.”

Here’s what to know about the ongoing negotiations. 

Didn’t the union and the shipping industry already reach a deal? 

Sort of. The ILA and the shipping industry, represented by the USMX, reached a tentative agreement on October 4, three days after the dockworkers went on strike. But that agreement simply delayed some parts of labor negotiations needed to reach a new contract.

In some ways, the tentative contract reached in October is a boon for workers at East and Gulf Coast ports. The deal provides port workers with a 61.5% wage increase over the next six years, although that is lower than the 77% increase the union had originally sought. The negotiated increase will result in the union’s highest paid workers earning $63 per hour in the final year of the contract, up from $39. 

But the agreement effectively kicked the can on other vital issues for dockworkers, especially related to job security. 

What issues remain in dispute? 

The key issue is the use of use of automation at ports, with dockworkers seeking to guarantee job security amid fears that technology could lead to their roles being eliminated. 

The 10 largest U.S. ports all use some kind of automation technology to move cargo, according to a Government Accountability Office report in March. These include automated gates, which let trucks and containers move through cargo terminals with limited worker interaction; so-called port community systems, which are digital platforms that automatically streamline logistics and supply-chain data; and technologies used in “internet-of-things” systems, such as RFID, GPS and cameras, to operate equipment and track containers. 

Semi-automated terminals employ people to operate machinery that moves containers from the cargo berth — the area where a ship is moored — to the yard. Equipment used to stack containers on top of one another is fully automated. 

But only three domestic ports — Long Beach Container Terminal in Long Beach, Calif., and TraPac and APM Terminal Pier 400 in Los Angeles — are fully automated. At fully automated ports, both horizontal and vertical container movement is handled by machines. Other technologies put to use at automated ports include AI-powered sensors, so-called digital twins — or identical, digital replicas of ports — and blockchain to automate the recording of transactions and track container locations. 

“With unresolved issues around automation and job security, the outcome of these talks could significantly impact global supply chains. Earlier agreements delayed disruptions, but pressure is mounting for a lasting resolution,” noted John Donigian, senior director of supply chain strategy at Moody’s, in a Monday email. 

Has Trump weighed in on the issue?

A wild card in the situation is the incoming presidential administration, given that Trump will be inaugurated on Jan. 20, just five days after the deadline for reaching a new labor contract. 

In December, Trump wrote on his social media app, Truth Social, that he had met with ILA President Harold Daggett and executive VP Dennis Daggett about automation and the impact on dockworkers, with the president-elect voicing support for the union. 

“I’ve studied automation, and know just about everything there is to know about it,” Trump wrote. “The amount of money saved is nowhere near the distress, hurt and harm it causes for American Workers, in this case, our Longshoremen.”

Still, Trump could face a major port strike just as he takes office, spurring him to intervene. He could also invoke the 1947 Taft-Hartley Act, a law that would force dockworkers back to their jobs as part of an 80-day cooling off period, although such an action could risk angering workers and some of Trump’s supporters. 

When could a port strike begin?

A port strike could begin on January, 16, shipping company Maersk is warning its customers. 

“The conditional agreement on wages is set to expire on January 15. If no agreement is reached by that date, a coast-wide strike on January 16 is possible. However, the negotiations have had no new developments since our last communication,” Maersk wrote in an advisory posted on its website on Dec. 30.

How could another port strike impact the U.S. economy?   

The October strike had negligible economic impact because it ended after three days. By contrast, a longer strike could crimp U.S. economic activity by halting shipping at major ports along the East and Gulf Coasts. 

For every week a strike continues, it could reduce U.S. economic activity by between $4.5 billion and $7.5 billion, analysts at Oxford Economics said in October. Retailers would face delays in receiving goods, while shipping costs would likely rise due to the need to reroute deliveries to West Coast ports that aren’t part of the negotiations.

“[A] longer strike could hurt retail profitability as there would be delay in future deliveries, with seasonal and fashion goods arriving past their peak selling period, resulting in lower sales and an increase in markdowns to clear these goods,” noted Christina Boni, Moody’s Ratings senior vice president of corporate finance, in an email. 

She added, “Smaller companies with less sophisticated supply chains and planning capabilities to pivot quickly would be most at risk.”

Still, retailers, manufacturers and other companies have had months to prepare, allowing them to stockpile inventory and rejigger their supply chains to cushion the blow from a modest ports shutdown.