A three-day strike that has severely disrupted shipping on the U.S. East and Gulf Coasts is set to stop immediately thanks to a tentative agreement reached by dock workers and port owners in the United States, the parties announced on Thursday.

Two people acquainted with the situation told Reuters that the tentative deal is for a pay increase of about 62% spread over six years. One of the individuals is a picket line worker who heard the announcement. In the course of the contract, that would result in an increase in average pay from $39 to almost $63 an hour.

USMX, the business consortium, had earlier increased its offer to a roughly 50% lift, while the International Longshoremen's Association (ILA) workers union had been requesting a 77% raise.

The agreement puts an end to the largest labour stoppage in over 50 years, which prevented container ships from Maine to Texas from being unloaded and raised concerns about shortages of goods ranging from car components to bananas, causing a backlog of moored ships outside of key ports.

In a statement, the port operators and the union agreed to extend their master contract until January 15, 2025, at which point they will reconvene to negotiate on any unresolved matters.

Among significant concerns that remain unaddressed is automation which workers worry will lead to job losses.

The government of US President Joe Biden had sided with the union, noting the shipping industry's record earnings since the COVID-19 outbreak and applying pressure on the port employers to increase their offer in order to clinch an agreement.

Calls to deploy federal authorities to end the strike, made by Republican politicians and industry trade associations, have been consistently rejected by his administration. Doing so would weaken Democratic support among unions in the run-up to the November 5th presidential election.

Impact?

Following a breakdown in negotiations for a new six-year contract, the ILA called for a 45,000-worker strike on Tuesday, marking its first significant work stoppage since 1977.

Everstream Analytics reports that by Wednesday, at least 45 container boats that were unable to unload were moored outside the East Coast and Gulf Coast ports affected by the strike, compared to just three on Sunday before the strike started.

According to JP Morgan estimates, the U.S. economy would suffer daily losses of almost $5 billion due to the strike.

A total of 36 ports that handle a variety of containerised commodities were impacted by the strike, including New York, Baltimore, and Houston.

According to economists, since businesses have increased shipments of essential products in recent months, the port restrictions won't initially result in higher consumer costs. But as long as there was a standstill, food prices would have probably reacted first, according to Morgan Stanley experts.

(Sources: investing.com, reuters.com)