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ILA strike in 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

(Adds ILA statement in paragraphs 4, 6-7, containers stuck in

New York city area ports in paragraph 10, White House officials

hope for short strike in paragraph 15, New York governor

comments in paragraphs 19-20)

By Doyinsola Oladipo and David Shepardson

NEW YORK, Oct 1 (Reuters) - Dockworkers on the U.S. East

Coast and Gulf Coast began a strike early on Tuesday, their

first large-scale stoppage in nearly 50 years, halting the flow

of about half the nation'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, in a

disruption analysts warned will cost the economy billions of

dollars a day, threaten jobs, and stoke inflation.

The International Longshoremen's Association (ILA) union

representing 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 Sept. 30 deadline.

The ILA said in a statement on Tuesday it shut down all

ports from Maine to Texas at 12:01 a.m. ET (0401 GMT) and had

rejected USMX's final proposal made on Monday, adding the offer

fell "far short of the demands of its members to ratify a new

contract."

The ILA's fiery leader, Harold Daggett, has said employers

like 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.

The USMX said in a statement on Monday it had offered to hike

wages by nearly 50%, up from a prior proposal.

"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 Tuesday.

"USMX owns this strike now. They now must meet our demands

for this strike to end."

USMX did not immediately respond to requests for comment.

The strike, the ILA's first since 1977, is worrying

businesses across the economy that rely on ocean shipping to

export their wares or secure crucial imports. The strike affects

36 ports that handle a range of containerized goods from bananas

to clothing to cars.

There are nearly 100,000 containers in New York City-area

ports alone waiting to be unloaded, now frozen by the strike,

and 35 container ships headed to New York over the coming week,

said Rick Cotton, executive director of the Port Authority of

New York and New Jersey.

The union is "holding the entire country over a barrel,"

said Steve Hughes, CEO of HCS International, which specializes

in automotive sourcing and shipping. "I'm really afraid that it

is going to be ugly."

The dispute is also wedging labor-friendly U.S. President

Joe Biden into a virtual no-win position as Vice President

Kamala Harris runs a razor-tight election race against

Republican former President Donald Trump.

White House Chief of Staff Jeff Zients and top economic

adviser Lael Brainard urged USMX board members at a meeting on

Monday to resolve the dispute fairly and quickly, a White House

official said. But Biden's administration has repeatedly ruled

out the use of federal powers to break a strike in the event of

an impasse.

U.S. Chamber of Commerce President Suzanne Clark urged Biden

on Monday to reconsider, saying it "would be unconscionable to

allow a contract dispute to inflict such a shock to our

economy."

The White House did not immediately comment on Tuesday, but

officials told Reuters on the condition of anonymity they are

hoping for a short strike. They pointed to the positive sign the

two sides had resumed talks late on Sunday and had narrowed

their differences over the past 24 hours.

BACKUP PLANS

Retailers accounting for about half of all container

shipping volume have been busily implementing backup plans as

they head into their all-important 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.

New York Governor Kathy Hochul said the state expects no

immediate impact on food suppliers or essential goods but said

impacts could widen depending on how long it lasts.

"It's critical for USMX and the ILA to reach a fair

agreement soon that respects workers and ensures a flow of

commerce through our ports," she said on Tuesday.