By Sherry Qin
Shares of Asian shipping companies fell sharply Friday after U.S. port workers suspended a three-day strike, dashing hopes for higher freight rates as a result of limited supply.
In China, Cosco Shipping dropped 8.5% and Orient Overseas (International) slid 8.1%. Japan's Nippon Yusen fell 8.8% and Kawasaki Kisen Kaisha declined 9.4%. South Korean shipping companies HMM and Pan Ocean declined 4.8% and 5.4%, respectively, in morning trade.
U.S. dockworkers on Thursday agreed to return to work after the International Longshoremen's Association and the U.S. Maritime Alliance, which represents ports and shipping companies, reached a tentative agreement on wages and suspended the strike until Jan. 15, the two parties said in a joint statement.
The two parties have agreed to return to the bargaining table to negotiate all other outstanding issues, they said.
The strike had closed container ports from Maine to Texas and threatened to disrupt everything from the supply of groceries in supermarkets to clothing and electronics.
"Spot container shipping rates have been moderating for some time now, and resolution of a threatened dockworkers' strike in the U.S. should further undermine sentiment and rates as we head into the slack season," Daniel Hellberg, a logistics and transport analyst at Tracking Traffic, said in a post on SmartKarma.
Spot rates for container shipping took a hit as an expected 2.5% cut to supply in the event of the strike lasting longer than seven days now won't happen, said Jefferies analyst Johnson Wan.
Port employers offered a 62% increase in wages to workers over six years, up from an earlier proposed raise of 50%, The Wall Street Journal reported Thursday, citing people familiar with the matter.
The cost of the higher wages will fall on cargo owners and shipping lines that manage the port terminals. Global giants such as Denmark's A.P. Moller-Maersk and China's Cosco Shipping operate many of the boxships that unload at U.S. ports.
While the chaos has eased temporarily, there is no guarantee that an extended agreement can be reached ahead of Jan. 15, Moody's Analytics economist Harry Murphy Cruise said.
"If that's the case, strikes could recommence, which have the potential to disrupt trade and supply chains across the world.' Cruise added.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
October 04, 2024 00:31 ET (04:31 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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