Port strike draws on frustration over pandemic-era profit boom

A strike among tens of thousands of dockworkers threatens to upend the delivery of everyday products nationwide and reignite inflation weeks before the presidential election.

The high-stakes standoff has revealed sharp disagreements between the two sides in recent days but the tensions trace back in no small part to the COVID-19 pandemic.

The economic disruption snarled supply chains and supercharged demand for household goods like exercise equipment and furniture. That worldwide shock generated massive profits for the shipping industry, since retailers raced to outbid each other for scarce space on cargo ships to satisfy consumer appetite.

As the dockworkers saw it, they weathered pandemic fears and grueling shifts to help transport the surge of goods, while their wages failed to keep up with skyrocketing inflation, experts who track the industry told ABC News. Now, they added, the workers want to share in the gains enjoyed by the shipping companies.

The International Longshoremen's Association, or the ILA, the union representing East and Gulf Coast dockworkers, is seeking a 77% pay increase over the 6-year duration of a new contract, as well as a ban on the use of some automated equipment.

Workers have received an offer that includes a 50% raise over the course of the contract, the U.S. Maritime Alliance, or USMX, an organization bargaining on behalf of the dockworkers' employers, said in a statement shared with ABC News on Tuesday.

The ILA did not respond to ABC News' request for comment for this story. Neither did the USMX.

"These were essential workers who did this valuable work, and meanwhile because of inflation their earnings were diminished," William Brucher, a professor of labor studies at Rutgers University, told ABC News. "That certainly plays into the demands that the workers are making."

The pandemic decimated some industries, like hospitality and travel, while buoying others. For the shipping industry, the global health calamity delivered an outright boom.

Over three years prior to the pandemic, the shipping container industry suffered $8 billion in losses, according to an analysis shared with ABC News by John McCown, a non-resident senior fellow at the Center for Maritime Strategy. After the onset of COVID-19, in 2020, the industry began to flourish, pocketing $16 billion in profits that year.

In 2021, profits soared to nearly $150 billion, and the following year climbed even higher to $215 billion, McCown found.

Maersk, a Danish shipping firm founded 120 years ago, saw profits rise six fold in 2021 to achieve the most profitable year in its history. The following year, profits went higher.

"Prices exploded," McCown said.

East and Gulf Coast dockworkers earn base pay of $39 per hour, supplementing the income with higher pay made during overtime shifts. In all, the average ILA member earns about $155,000 per year, McCown estimated.

During the pandemic, many dockworkers took pride in their role as frontline employees, and some availed themselves of plentiful opportunity for overtime pay amid the rush of goods, Peter Cole, a professor at Western Illinois University who studies the history of dockworkers, told ABC News.

However, many workers grew frustrated that their wages failed to keep up with rising inflation rates, let alone the ballooning profits earned by the shipping firms, Cole added.

"They very much saw themselves as crucial but also as victims," Cole said. "They're seeing quarterly reports from Maersk and other big corporations making profits in the tens of billions."

The pandemic gave rise to worker organizing at high-profile companies like Amazon and Starbucks. In a sense, the current strike among dockworkers is a late addition to that trend, Cole said.

"Many workers were radicalized by COVID," Cole said. "These workers get one time to demand a raise, which is in between contracts. So, they're going for it."

To be sure, at least one expert who spoke to ABC News downplayed the pandemic-era challenges faced by the dockworkers and described efforts to invoke that period as primarily a negotiation strategy.

"Maybe workers sacrificed but not so much the longshoremen," Yossi Sheffi, director of the MIT Center for Transportation and Logistics, told ABC News, indicating that the dockworkers faced relatively low risk of contracting COVID-19 on the job. "They don't work in close proximity and they work in the open air."

"They're some of the highest-paid blue collar workers in the world," Sheffi added.

Shipping company profits have fallen well below the peak reached during the pandemic, Sheffi noted. "Companies go through ups and downs, especially shipping companies," he said.

President Joe Biden retains the power to halt the strike under the 1947 Taft-Hartley Act. The U.S. Chamber of Commerce and other trade groups sent letters to Biden in recent days urging the White House to intervene, which it has repeatedly said it will not do.

"This country's port workers put their health and safety on the line to keep working through the pandemic so we could get the goods we needed as COVID raged and these workers will help communities recover from the devastating effects of Hurricane Helene," Acting Secretary of Labor Julie Su said in a statement on Tuesday.

"There is room for both companies and their workers to prosper. 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," Su added in part.

In a statement on Wednesday, ILA President Harold Dagget praised Su for her support. "Our ILA rank and file members will continue to strike for fair wages and their share of the Foreign Ocean Carriers record billion-dollar profits and we are grateful to have the support of the U.S. Labor Department," Dagget said.

The USMX called for continued negotiations. "USMX's goal continues to be focused on ratifying a new Master Contract that addresses all the critical issues the parties need to bargain. Reaching an agreement will require negotiating – and our full focus is on how to return to the table to further discuss these vital components, many of which are intertwined," the organization said in a statement on Wednesday.

ABC News' Soo Youn and Elizabeth Schulze contributed to this report.