U.S. Ports Reopen After Major Dockworker Strike

By Doyinsola Oladipo and David Shepardson

(Reuters) – U.S. East Coast and Gulf Coast ports began reopening on Thursday night after dockworkers and port operators reached a wage deal to settle the industry’s biggest work stoppage in nearly half a century. However, clearing the cargo backlog will take time.

The strike’s end came sooner than investors had expected, diminishing the expectations for rising shipping stocks across Asia on Friday, as freight rates were no longer anticipated to surge.

At least 54 container ships queued outside the ports over three days due to the strike, which prevented unloading and posed shortages for various goods, including bananas and auto parts. The figure, reported by Everstream Analytics, was calculated at 4:00 p.m. ET (2000 GMT). More vessels are expected to arrive soon.

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) port operators announced the wage deal and the immediate end to the strike late on Thursday. Sources indicated that workers would receive a pay increase of approximately 62% over the next six years, raising average wages from $39 to about $63 an hour.

As a result, shares in shipping companies across Asia saw significant declines. “Shipping stocks had previously rallied on expectations of price increases triggered by the strike by U.S. dock workers and the tense situation in the Middle East,” noted Taishin Securities Investment Advisory analyst Tony Huang. “Now that the strike is over, the price rise factor is no longer in play.”

Japan’s Nippon Yusen, which had reached a record high the previous day, fell 9%, while Kawasaki Kisen dropped 9.5%. Mitsui O.S.K. Lines also saw a 7% decline on its heaviest trading day in 18 months. In South Korea, HMM fell 6.6% to a three-week low, with Pan Ocean decreasing by 5.7%. Meanwhile, Taiwanese companies like Evergreen Marine, Wan Hai Lines, and Yang Ming Marine experienced drops ranging from 8.8% to 10%.

In Hong Kong, Orient Overseas (International) was the biggest loser on the Hang Seng index, plummeting 8%.

The ILA strike involved 45,000 port workers, marking their 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 about $5 billion per day.

Retailers account for approximately half of all container shipping volume, with companies like Walmart, IKEA, and Home Depot relying heavily on the East Coast and Gulf Coast ports, as per eMarketer analyst Sky Canaves.

According to bill of lading data from Import Yeti, major importers affected by the strike include IKEA, Walmart, and Goodyear Tire & Rubber. Additionally, East Coast ports are crucial for coffee imports, with prices already rising due to port disruptions.

The tentative wage deal ended the strike, but the two sides are still negotiating other issues, including the ports’ use of automation, which workers fear will lead to job losses.

“The decision to end the current strike and allow the East and Gulf coast ports to reopen is good news for the nation’s economy,” stated the National Retail Federation. “The sooner they reach a (final) deal, the better for all American families.”