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 With ports near gridlock and cargo delays being felt throughout the
U.S. economy, President Barack Obama on Saturday dispatched Labor
Secretary Tom Perez to California to try to broker an agreement on a
new contract between dockworkers and the group representing shippers
and terminal operators.
Ports along the coast, which between them handle nearly half of all
U.S. maritime trade and more than 70 percent of imports from Asia,
have been experiencing severe delays since October, and the effects
are rippling far beyond the United States.
Japan's Honda Motor Co <7267.T> said on Sunday it would slow
production for a week at plants in Ohio, Indiana and Ontario,
Canada, as parts it ships from Asia have been held up by the
dispute, affecting models including the Civic, CR-V and Accord.
"We do not have a sufficient supply of several critical parts to
keep the production lines running smoothly and efficiently,"
spokesman Mark Morrison said.
Honda and other carmakers have already started transporting some
crucial parts from Asia to their U.S. factories by plane.
Fuji Heavy Industries Ltd <7270.T>, maker of Subaru cars, said it
would continue flying parts to its U.S. factory beyond an initial
arrangement through the end of February, which it previously said
would cost an extra 7 billion yen ($59 million) a month.
Toyota Motor Corp <7203.T>, which built about 2 million vehicles in
North America last year, said it has reduced overtime at some
factories as a result, while Nissan Motor Co Ltd <7201.T> said it
had been slightly affected.
RATES RISING
With dozens of ships caught up in queues for miles along the West
Coast, many waiting more than a week, the rates to charter container
ships have begun to climb.
"The strike is affecting a lot of vessels. There's a lot of delays,
and this is pushing up panamax (container) rates as fewer ships are
available for new orders," a leading Singapore-based broker said.
A Shanghai index for U.S. West Coast (USWC) freight rates rose 23
points last week to 2,265 and brokers said quotes had risen a
further five points on Monday.
The dispute is also affecting volumes. Singapore-listed Neptune
Orient Lines' container shipping unit reported an 8 percent decline
in the fourth quarter, partly due to fewer trans-pacific sailings as
a result of the congestion.
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Roberto Giannetta, secretary of the Hong Kong Liner Shipping
Association, said the effects were being felt across the industry,
as shippers looked for ways round the delays.
"All shipping lines are affected, and all shipping lines are making
alternative arrangements one way or another, by ... reallocating
assets to the trans-pacific or redirecting cargo via the East
Coast."
Even if the dispute is resolved, there could be long-term
consequences for the ports and the communities that depend on them.
"Trust in West Coast ports is at an all-time low, and the perception
of supply chain risk is at an all-time high," said Peter Tirschwell,
chief maritime analyst at the JOC Group, a supplier of U.S. seaborne
trade data. "We are entering another period of fundamental supply
chain re-evaluation that is already leading some shippers to
permanently abandon the West Coast."
For air freighters, however, the crisis is an opportunity.
Hong Kong carrier Cathay Pacific <0293.HK> reported on Monday
combined cargo and mail traffic figures for Cathay Pacific and
Dragonair rose 12.5 percent in January, outpacing a 2.7 percent
increase in passenger numbers, thanks to increased North American
traffic.
"We saw a pick-up in demand as January progressed, and by the end of
the month we were operating close to a full freighter schedule,"
said its cargo sales and marketing manager Mark Sutch.
(Additional reporting by Brenda Goh in Shanghai and Rujun Shen and
Henning Gloystein in Singapore; Writing by Will Waterman; Editing by
Alex Richardson)
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