US port strike ends, leaving cargo backlog
54 container ships queued outside ports, risking shortages
Tentative deal includes 62% wage hike over six years, sources say
Strike cost US economy $5 billion a day, JP Morgan analysts say
Shipping stocks tumble across Asia and Europe
Adds comment from economist in paragraph 3, background on administration involvement in paragraphs 9-10, updates stock moves; changes media label to USA-PORTS/LABOR
By Doyinsola Oladipo and David Shepardson
Oct 4 (Reuters) -U.S. East Coast and Gulf Coast ports were reopened on Friday after dockworkers and port operators reached a wage deal to settle the industry's biggest work stoppage in nearly half a century, but clearing the cargo backlog will take time.
The strike ended sooner than investors had expected, weakening shipping stocks as freight rates were no longer expected to surge.
"The port strike ended fairly quickly, removing any significant downside risk to the economy this quarter," said Ryan Sweet, chief U.S. economist at Oxford Economics.
At least 54 container ships had lined up outside the ports as the strike prevented unloading, according to Everstream Analytics, threatening shortages of anything from bananas to auto parts. More ships are sure to arrive.
Pricing platform Xeneta said it was likely to take two to three weeks for the normal flow of goods to be reestablished.
"Remember that ships keep calling, so it's not just a matter of handling the ships already in line, but to work extra hard to run down the congestion before supply chains are rerunning," Xeneta Chief Analyst Peter Sand told Reuters.
The International Longshoremen's Association workers union and United States Maritime Alliance (USMX) port operators announced the deal late on Thursday. Sources said they had agreed a wage hike of around 62% over six years, raising average wages to about $63 an hour from $39 an hour.
The ILA launched the strike by 45,000 port workers, their first major work stoppage since 1977, on Tuesday, affecting 36 ports from Maine to Texas. JP Morgan analysts estimated the strike would cost the U.S. economy around $5 billion per day.
The disruption was a headache for Democratic President Joe Biden's administration ahead of the Nov. 5 presidential election pitting Democratic Vice President Kamala Harris against Republican former President Donald Trump. It threatened to dent U.S. employment figures in a report due to be released shortly before Election Day.
The White House had put pressure on the USMX employer group to sweeten its contract offer to end the strike, as business trade groups warned of devastating consequences if the stoppage continued.
Shares in shipping companies in Asia and Europe fell after the deal was announced.
Shipping group A.P. Moeller-Maersk MAERSKb.CO for example fell 4.7% by Friday morning, while Hapag-Lloyd HLAG.DE was down 14.4%. Japan's Nippon Yusen 9101.T, which had hit a record high a day earlier, shed 9.4% and Kawasaki Kisen 9107.T fell 9.7%.
"Shipping stocks had previously rallied on expectations of price increases triggered by the strike by U.S. dockworkers and the tense situation in the Middle East," said Taishin Securities Investment Advisory analyst Tony Huang.
Retailers account for about half of all container shipping volume, with Walmart WMT.N, IKEA, and Home Depot HD.N among those that rely on the East Coast and Gulf Coast ports, according to eMarketer analyst Sky Canaves.
Bill of lading figures from Import Yeti, a data firm, show the importers reliant on the affected ports include IKEA, Walmart and Goodyear Tire & Rubber GT.O.
Many retailers said they had stocked early for the coming holiday shopping season, and that a short strike would likely not have much impact on availability of products.
East Coast ports are also destinations for coffee, whose price has risen because of the disruptions.
The tentative deal on wages has ended the strike, but only extends the current contract to Jan. 15. The two sides will continue to talk about other issues, such as the ports' use of automation that workers say will lead to job losses.
"The decision to end the current strike and allow the East and Gulf coast ports to reopen is good news for the nation’s economy," the National Retail Federation said in a statement. "The sooner they reach a (final) deal, the better for all American families."
Cargoes stuck at US ports as labor strike continues https://reut.rs/3zSu1g3
TIMELINE-US East, Gulf Coast port workers go on strike, threatening global ID:nL1N3LC14X
Containerized goods to East/Gulf and West Coast of US https://reut.rs/3zArl6G
Additional reporting by Jihoon Lee in Seoul, Emily Chan in Taipei, Tom Westbrook in Singapore, Stine Jacobsen in Copenhagen; Writing by Peter Henderson; Editing by Sonali Paul, Barbara Lewis and Jonathan Oatis
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
