An East and Gulf coast port closedown on Oct. 1 would be a ‘Black Swan event” for shipping and trade, according to one Asia-based analyst.
“Our discussion with Asian shipping companies indicates that a strike will be very negative for the sector,” said Bonnie Chan, a senior analyst on the industrials & transportation team at Macquarie Equities Research. “This would also have wider ramifications for the U.S. and global economy if the strike is prolonged, as retailers would not have enough inventory for the holiday season.”
She said lines were worried that a shutdown would see them forced to bear extra crew, bunker and administration costs which would not be recouped by income from congestion surcharges imposed on U.S.-bound cargoes.
“Although cargo owners do have the option to divert Trans-pacific cargoes to the West Coast, this is unlikely to be sufficient as intermodal capacity is limited,” she said.
And, she added, there are few diversion options for trans-Atlantic cargoes.
The cost of idle vessels and equipment, and the need for extra deployment to clear congestion after a shutdown, would further add to the cost burden on lines.
“Shipping lines highlight that it took them over a month to clear out the congestion when US West Coast ports were shut by strikes for 10 days in 2002,” she said.
Contact Mike King at firstname.lastname@example.org.