US port strike ends leaving cargo backlog

(FILES) Dockworkers gather at the Bayport Container Terminal in Seabrook, Texas, on October 1, 2024. US dockworkers will return to work after a three-day strike at East and Gulf Coast ports ended on October 3 after the union and port operators reached a tentative deal on pay and extended the current contract to January 15, both sides said. --Mark Felix / AFP

US East Coast and Gulf Coast ports began reopening late on Thursday 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 across Asia on Friday as freight rates were no longer expected to surge.

At least 54 container ships queued outside the ports as the strike had prevented unloading and threatened shortages of anything from bananas to auto parts.

More ships to arrive

Everstream Analytics was calculated the number queuing at 4 p.m. ET (2000 GMT). 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 (ILA) 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 percent over six years, raising average wages to about $63 an hour from $39 an hour.

Impact on stocks

Shares in shipping companies in Asia and Europe fell.

“Shipping stocks had previously rallied on expectations of price increases triggered by the strike by US dock workers and the tense situation in the Middle East,” said Taishin Securities Investment Advisory analyst Tony Huang.

In Europe, shipping group AP Moeller-Maersk fell 7.7 percent to the bottom of the STOXX 600, while Hapag-Lloyd was down 12.4 percent and Switzerland’s Kuehne und Nagel was down 1.8 percent

Japan’s Nippon Yusen, which had hit a record high a day earlier, shed 9 percent and Kawasaki Kisen fell 9.5 percent. Mitsui OSK Lines also lost 7 percent in its busiest trading day for 18 months.

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In South Korea, HMM dropped 6.6 percent to a three-week low and Pan Ocean dropped 5.7 percent, while Taiwan’s Evergreen Marine, Wan Hai Lines and Yang Ming Marine also fell between 8.8 percent and 10 percent in their heaviest drops for several months.

In Hong Kong, Orient Overseas (International) was the biggest loser on the Hang Seng index with an 8-percent drop.

First since 1977

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 US economy around $5 billion per day.

Retailers account for about half of all container shipping volume, with Walmart, IKEA, and Home Depot 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.

East Coast ports are also destinations for coffee, whose price has risen because of the disruptions.