U.S. East Coast and Gulf Coast ports has reopened after dockworkers and port operators reached a wage agreement, ending the largest work stoppage in nearly 50 years.
However, industry experts warn that it would take time to clear the resulting cargo backlog.
The strike, which affected 36 ports from Maine to Texas and involved 45,000 workers from the International Longshoremen’s Association (ILA), concluded sooner than many investors anticipated.
As a result, shipping stocks across Asia weakened on Friday, as fears of a surge in freight rates diminished.
At 4:00 p.m. ET (2000 GMT), at least 54 container ships were still queued outside the ports, unable to unload due to the strike, threatening shortages of essential goods like bananas and auto parts.
“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 re-running,” said Peter Sand, Chief Analyst at Xeneta.
The deal between the ILA and the United States Maritime Alliance (USMX) was announced late Thursday, reportedly involving a wage hike of approximately 62% over six years, raising average hourly wages from $39 to about $63.
The announcement had immediate repercussions on global shipping stocks, with significant declines noted across Asia and Europe.
“Shipping stocks had previously rallied on expectations of price increases triggered by the strike by U.S. dock workers and the tense situation in the Middle East,” said Tony Huang, an analyst at Taishin Securities Investment Advisory.
Following the news, shares in A.P. Moeller-Maersk dropped 7.7%, while Hapag-Lloyd fell 12.4%, and Kuehne und Nagel decreased by 1.8%. In Japan, Nippon Yusen lost 9%, and Kawasaki Kisen saw a drop of 9.5%.
In South Korea, HMM decreased by 6.6%, hitting a three-week low, while Taiwan’s Evergreen Marine and Wan Hai Lines faced declines of 8.8% to 10%. In Hong Kong, Orient Overseas (International) recorded an 8% drop, marking the biggest loss on the Hang Seng index.
Analysts at JP Morgan estimated that the strike cost the U.S. economy approximately $5 billion per day, with retailers like Walmart, IKEA, and Home Depot heavily relying on the affected ports, according to eMarketer analyst Sky Canaves.
Bill of lading figures from Import Yeti also highlighted that these importers are crucial to the port’s operations.
Although the tentative wage deal has resolved the immediate strike, both parties would continue to negotiate other contentious issues, including the ports’ automation practices, which workers fear could 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,” stated the National Retail Federation. “The sooner they reach a final deal, the better for all American families.”
While the immediate crisis appears to have passed, industry experts predict that it will take two to three weeks for normal shipping operations to resume fully.
Boluwatife Enome
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