The strike at the US port ends and leads to a cargo backlog

The strike at the US port ends and leads to a cargo backlog

By Doyinsola Oladipo and David Shepardson

(Reuters) – Ports on the U.S. East and Gulf coasts began reopening late on Thursday after longshoremen and port operators reached a wage agreement to resolve the industry’s largest labor stoppage in nearly half a century. However, clearing the cargo congestion will take time.

The strike ended earlier than investors expected, weakening shipping stocks across Asia on Friday as freight rates were no longer expected to rise.

At least 54 container ships lined up at ports as the strike prevented unloading and caused shortages of everything from bananas to car parts. Everstream Analytics calculated the queue count at 4:00 p.m. ET (2000 GMT). There will definitely be more ships arriving.

Pricing platform Xeneta said it would likely take two to three weeks to restore the normal flow of goods.

“Remember that ships are calling all the time. “So it’s not just about clearing the ships already in line, but also working extra hard to clear the congestion before supply chains get back up and running,” Xeneta chief analyst Peter Sand told Reuters.

The International Longshoremen’s Association (ILA) union and port operators the United States Maritime Alliance (USMX) announced the deal late Thursday. Sources said they agreed to a wage increase of about 62% over six years, increasing the average wage from $39 an hour to about $63 an hour.

Shares of shipping companies in Asia and Europe fell.

“Shipping stocks had earlier rallied on expectations of price increases triggered by the U.S. dockworkers’ strike and the tense situation in the Middle East,” said Tony Huang, analyst at Taishin Securities Investment Advisory.

In Europe, shipping group AP Moeller-Maersk fell 7.7% to bottom the STOXX 600, while Hapag-Lloyd fell 12.4% and Switzerland’s Kuehne and Nagel fell 1.8%.

Japan’s Nippon Yusen, which hit a record high a day earlier, lost 9% and the Kawasaki Kisen fell 9.5%. Mitsui OSK Lines also fell 7% on its busiest trading day in 18 months. [.T]

In South Korea, HMM fell 6.6% to a three-week low and Pan Ocean fell 5.7%, while Taiwan’s Evergreen Marine, Wan Hai Lines and Yang Ming Marine also fell between 8.8% and 10% and the recorded the largest declines in several months.

In Hong Kong, Orient Overseas (International) was the biggest loser in the Hang Seng index, falling 8%. [.HK]

The ILA launched the strike by 45,000 longshoremen on Tuesday, the first major work stoppage since 1977, affecting 36 ports from Maine to Texas. Analysts at JP Morgan estimated the strike would cost the U.S. economy around $5 billion a day.

According to eMarketer analyst Sky Canaves, retailers account for about half of total container shipping volume, including Walmart, IKEA and Home Depot, which rely on the East and Gulf Coast ports.

Waybill numbers from Import Yeti, a data company, show that importers relying on the affected ports include IKEA, Walmart and Goodyear Tire & Rubber.

East Coast ports are also destinations for coffee, the price of which has risen due to the disruptions.

Although the tentative agreement on wages ended the strike, both sides will continue to work out other issues, such as the use of automation at the ports, which workers say will lead to job losses.

“The decision to end the current strike and allow the reopening of East and Gulf Coast ports is good news for the country’s economy,” the National Retail Federation said in a statement. “The sooner they reach a (final) agreement, the better for all American families.”

(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 and Barbara Lewis)