Strike shuts down third-biggest U.S. port

A labor dispute has shut down one of America's busiest ports.

More than 1,000 union dock workers in New York City walked off the job Friday, halting business at the Port Authority of New York and New Jersey shipping terminals. The bi-state agency operates a vast complex of terminals in Newark, Elizabeth, Brooklyn and Staten Island and rents those facilities to 40 different shippers.

In a statement, the Port Authority confirmed the walkout and asked members of the International Longshoremen Association (ILA) to return to work. "As the agency that oversees the largest port complex on the East Coast, we strongly urge the ILA members to return to work immediately and resolve their differences after they return," the agency wrote. "In the meantime, Port Authority Police are actively working to ensure public safety for all of the stakeholders at the port."

A spokesperson for the New York Shippers Association (NYSA), which represents the port's shipping companies, told CBS MoneyWatch the group believes the job action constitutes an "illegal strike" because the ILA is operating under a current and binding contract.

The ILA, headquartered in North Bergen, New Jersey, did not answer the phone. A spokesman for the group told Bloomberg News that workers were striking over what they perceive as interference by the Waterfront Commission in the collective bargaining agreement between the ILA and NYSA. The Waterfront Commission was created in the 1950s to fight crime.

"I am told the last time something like this happened was back in 2010," Beverly Fedorko, the NYSA's spokesperson, said.

The Port of New York and New Jersey is the busiest on the East Coast, ranking third nationally after the ports of Los Angeles and Long Beach, California. Sources close to Port operations, who were not cleared to comment for the media, said the biggest immediate logistical issue was working with the terminal operators to get trucks that were trapped in the terminals out of the facility.

According to the last available data from 2014, the Port of New York and New Jersey handled 73.6 million metric tons of freight with 18.1 million metric tons coming in as imports and 55.5 million metric tons going out as exports. That same year the port handled close to 650,000 cars, with 272,000 leaving as exports and 368,000 coming in from overseas.

The Port of New York and New Jersey handles about $200 billion worth of cargo annually. In the era of real-time delivery, where companies strive to keep inventory levels as low as possible, a protracted shipping delay can hurt business.

In 2012, a federal mediator had to be brought in to help the ILA and the NYSA reach a contract settlement. The union had voted that year to strike, but members stayed on the job. At issue in that protracted negotiation was the continued payment of royalties for every container handled in the port.

Across the industry, a move to replace union labor with machines has been a major sticking point between labor and management. Unionized dock workers are some of the highest-paid hourly wage employees in the country, reaching the high five figures, or higher, depending on seniority and overtime.