Exporters face delays at U.S. ports
Potential dock strike during peak shipping season before Christmas may see cargo being held up and shippers imposing extra charges
Exporters face delayed cargo shipments and higher freight charges if dockworkers at US Gulf and east coast ports take industrial action in the coming weeks over new labour contracts.
The disruption would come during the peak pre-Christmas and New Year shipping season as Hong Kong and mainland suppliers rush to help fill store shelves with toys, clothes, electronics and other consumables.
Charles de Trenck, the head of consultancy firm Transport Trackers, said any unrest would affect everyone.
Likening the potential situation to the 11-day west coast port lockout in 2002, he said: "All the traffic flows were badly hit."
A post-lockout study by transport advisory firm Martin Associates said the dispute cost exporters and importers US$14.4 billion, although the accuracy of this figure has been disputed.
Representatives from the International Longshoremen's Association and the United States Maritime Alliance, which represents container lines and port associations, have been ordered back to the negotiating table next week by federal government mediators.
A shipping industry source said if there was a strike, lawmakers would "order a 'back-to-work' and mediation very quickly, likely within a week".
But he said: "Even one week's disruption could have significant knock-on effects."
More than 20 box carriers, including Orient Overseas Container Lines and Cosco Container Lines, have already announced plans to impose a congestion surcharge of between US$320 and US$1,270 per container if port operations are disrupted.
With industrial action affecting ports, the shipping insider said some vessels and cargo would be rerouted through west coast ports such as Los Angeles and Long Beach. He added that terminal and railway bottlenecks meant only a small proportion of the east coast cargo volume could be handled by the west coast facilities. Transporting the boxes from the west coast across the country to cities such as New York would be more expensive.
Overall, there would be cargo "backlogs, bottlenecks, delays, etc. Plus labour that is ordered back to work but which remains fundamentally in dispute is not likely going to deliver high productivity. So there could be ongoing impacts to cargo delivery," the cargo insider said.
The east coast ports handle about 25 per cent of the containerised freight to and from Asia, according to the Federal Maritime Commission.
OOCL says it will levy a surcharge of US$600 per 20-foot container and US$750 per 40-foot box from October 1 on shipments to and from US ports if there is labour unrest. It defined unrest to include strikes, lockouts, work stoppages or slowdowns.
Cosco Container Lines and China Shipping Container Lines plan to impose a surcharge of US$800 per 20-foot container and US$1,000 for a 40-foot box.
By comparison, the freight rate for shipping a 40-foot container from Shanghai to the US east coast is about US$3,740, according to the Shanghai Shipping Exchange.
Sunny Ho Lap-kee, an executive director of the Hong Kong Shippers' Council, said manufacturers and exporters would "suffer substantially" from delivery disruptions caused by any industrial action by port workers.
Ho said: "It is most unfair to shippers. And shipping lines are adding to shippers' suffering."
