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ILA strike is first such action by the union since 1977

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Strike could cost the economy an estimated $5 billion a

day

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Strike disputes include pay, terminal automation project

issues

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White House officials hope for short strike, sources say

By Doyinsola Oladipo and David Shepardson

NEW YORK, Oct 1 (Reuters) - U.S. East Coast and Gulf

Coast dockworkers began their first large-scale strike in nearly

50 years on Tuesday, halting the flow of about half the

country's ocean shipping, after negotiations for a new labor

contract broke down over wages.

The strike blocks everything from food to automobile

shipments across dozens of ports from Maine to Texas, a

disruption analysts warned will cost the economy billions of

dollars a day, threaten jobs and potentially stoke inflation.

President Joe Biden and his administration have repeatedly

said they will not use federal powers to end the strike, and on

Tuesday pressured dockworker employers to bump up their contract

offer to land a deal.

The sides are talking to each other, but there was no active

bargaining late on Tuesday and the strike appeared to be headed

into a second day, a person briefed on the talks said.

The International Longshoremen's Association union, which

represents 45,000 port workers, had been negotiating with the

United States Maritime Alliance (USMX) employer group for a new

six-year contract ahead of a midnight Monday deadline.

The ILA said in a statement it shut down all ports from

Maine to Texas at 12:01 a.m. ET (0401 GMT) after rejecting

USMX's final proposal, adding the offer fell "far short of the

demands of its members to ratify a new contract".

The ILA's leader, Harold Daggett, has said employers such as

container ship operator Maersk and its APM

Terminals North America have not offered appropriate pay

increases or agreed to demands to stop port automation projects

that threaten jobs.

"We are prepared to fight as long as necessary, to stay out

on strike for whatever period of time it takes, to get the wages

and protections against automation our ILA members deserve,"

Daggett said on Tuesday.

USMX said in a statement: "Our current offer of a nearly 50%

wage increase exceeds every other recent union settlement, while

addressing inflation and recognizing the ILA's hard work to keep

the global economy running."

Daggett said the union is pushing for more, including a $5

per hour raise for each year of the new six-year contract.

The White House weighed in, saying it was time for USMX to

negotiate a fair contract for workers.

"Shippers have made record profits since the pandemic, and,

in some cases, have seen profits grow in excess of 800%," White

House press secretary Karine Jean-Pierre said, referring to a

boom in shipping demand since the COVID-19 pandemic.

"It's only fair that workers who put themselves at risk

during the pandemic to keep ports open see a meaningful increase

in their wages, as well."

Acting Secretary of Labor Julie Su said the employer group

has "refused to put an offer on the table that reflects workers'

sacrifice and contributions to their employers' profits."

"The parties need to get back to the negotiating table, and

that must begin with these giant shipping magnates acknowledging

that if they can make record profits, their workers should share

in that economic success," she said.

The dispute is wedging labor-friendly Biden into a virtual

no-win position, with Vice President Kamala Harris in a

razor-thin race for the White House with Republican former

President Donald Trump in the Nov. 5 election.

Trump on Tuesday blamed the strike on inflation, which he

said was caused by the Biden-Harris administration.

"Everybody understands the dockworkers because they were

decimated by this inflation, just like everybody else in our

country and beyond," Fox News Digital quoted Trump as saying in

an interview.

HIGHER COSTS

The strike, the ILA's first major stoppage since 1977, is

worrying businesses that rely on ocean shipping to export their

wares or secure crucial imports. It affects 36 ports - including

New York, Baltimore and Houston - that handle a range of

containerized goods from bananas to clothing to cars.

Transportation Secretary Pete Buttigieg on Tuesday called on

the ocean carriers to withdraw surcharges they may impose in the

wake of the strike. USMX declined to comment.

The walkout could cost the American economy roughly $5

billion a day, JP Morgan analysts estimate.

French shipping group CMA CGM, the world's third-largest

container shipper, on Tuesday issued a force majeure notice over

the strike, and said it may charge additional shipping fees for

delayed vessels.

The National Retail Federation called on Biden's

administration to use its federal authority to halt the strike,

saying the walkout could have "devastating consequences" for the

economy.

Republicans, including Virginia Governor Glenn Youngkin,

also called on Biden to end the strike, warning of its impact on

the economy.

The U.S. Department of Agriculture said on Tuesday it does

not expect significant changes to food prices or availability in

the near term.

Grocery chain owner Ahold Delhaize also said it

expected minimal short-term impact on its supply chain.

BACKUP PLANS

Hundreds of dockworkers demonstrated at a New York City area

shipping terminal in Elizabeth, New Jersey, carrying signs and

shouting slogans as music blared and vendors hawked food.

Daggett arrived to rally them with cheers of "ILA all the

way!"

"Everything that comes in this country comes from the

containers off these ships that my men work. And I want the

world to know it. Don't come after us saying we're greedy. Go

after those greedy bastards that own these companies in Europe,"

Daggett told reporters.

Retailers accounting for about half of all container

shipping volume, along with other shippers, have been busily

implementing backup plans to minimize the impact of the strike

as they head into the winter holiday sales season.

Many of the big players rushed in Halloween and Christmas

merchandise early to avoid any strike-related disruptions,

incurring extra costs to ship and store those goods.

Retail behemoth Walmart ( WMT ), the largest U.S. container

shipper, and membership warehouse club operator Costco

say they are doing everything they can to mitigate any impact.

Danish drugmaker Novo Nordisk, meanwhile, said it

has workaround plans in place to minimize or prevent any

disruption to its production, including by using air freight,

CNBC reported on Tuesday, citing a company spokesperson.

Lars Jensen, CEO of shipping consultancy Vespucci Maritime,

said the strike is unlikely to lead to any critical shortages,

but could raise costs for consumers if it is prolonged.

"At the end of the day, the only one who's going to end up

paying the bill for this is the U.S. consumer, simple as that,

because import costs are going to rise and those costs are going

to be passed on to all the imported products," he said.

More than 38 container vessels were waiting at anchor near

U.S. ports by Tuesday, compared with just three on Sunday,

according to Everstream Analytics.