US Labor department reaches out to employer group amid possible port strike

By Abhinav Parmar and Lisa Baertlein

(Reuters) - The U.S. Department of Labor has reached out to the United States Maritime Alliance ahead of a threatened Oct. 1 port strike on the East Coast and Gulf of Mexico by the International Longshoremen's Association, the employer group said on Monday.

The Department of Labor's involvement suggests that President Joe Biden's administration is willing to help hammer out a deal before the existing contract covering 45,000 workers at three dozen ports expires at midnight on Sept. 30.

The likelihood of an ILA strike is "on the rise as negotiations prove contentious, though action is unlikely to last long," TD Cowen analyst Jason Seidl said in a client note. Any work stoppages or slowdowns would come just weeks ahead of the Nov. 5 U.S. presidential election.

The USMX employer group expressed willingness to collaborate with the Federal Mediation & Conciliation Service in contract negotiations - contingent on both parties agreeing to mediation.

USMX said it has been unable to schedule a meeting with the ILA to continue talks on a new Master Contract.

ILA disputed that in a statement on Monday, saying the two sides have communicated multiple times in recent weeks.

"The stalemate remains in Master Contract negotiations because USMX continues to offer ILA longshore workers an unacceptable wage increase package," the union said.

The ports affected by a potential strike stretch from Maine to Texas and handle about half of U.S. imports through facilities in cities such as New York/New Jersey, Houston and Savannah, Georgia. Any ILA action would mainly affect labor-intensive container shipments and have little to no impact on critical shipments of oil and gas.

The five largest East and Gulf Coast ports each day in August handled a combined 49,532 20-foot equivalent units (TEUs) of cargo valued at $2.7 billion, said John McCown, senior fellow at the Center for Maritime Strategy.

Any cargo backups from work disruptions would cascade through U.S. and global supply chains, stranding goods and sending costs surging.

Echoing calls from industry groups representing retailers, manufacturers and farmers, 69 Republicans from the U.S. House of Representatives last week called on the Biden Administration to do everything in its power to prevent a port work stoppage that could lead to "dire impacts to our supply chains, our economy, and the American consumer."

Biden recently said he did not intend to invoke a federal law known as the Taft-Hartley Act to prevent a port strike.

He did, however, send Acting Labor Secretary Julie Su to negotiate a pivotal contract between U.S. West Coast seaport employers and union workers last summer, following labor disruptions at California ports. The resulting contract deal included a 32% pay increase that was anticipated to set a precedent for East and Gulf Coast labor talks.

(Reporting by Abhinav Parmar in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Tasim Zahid and Nick Zieminski)