Thousands of Taiwanese exporters may soon feel a financial pinch as the result of a dockworkers dispute with shippers on the US West Coast, if imports of electronics, toys and apparel continue to be disrupted.
The lockout of dockworkers at 29 US West Coast ports continued yesterday, threatening to choke off trade between the US and Asia.
Analysts said that a lockout that lasts more than a few days would disrupt holiday shipments from East Asian countries such as Taiwan and China.
"Around 100,000 Taiwanese businesses" who ship goods directly to the West Coast -- including 20 percent of them based in Taiwan and another 50 percent in China and other South Asian countries -- will be affected, Taiwan Small and Medium-size Enterprises Association (中小企業協會) chairman Day Sheng-tong (戴勝通) told Taipei Times yesterday.
Where's the money?
The impact may initially be seen in the form of delayed payments for goods stalled at US ports or on ships waiting to dock.
According to Day, around 85 percent of US buyers use telegraphic transfers, a payment system where the buyer pays 30 to 90 days after the arrival of goods.
"Delayed deliveries may trigger late payments" resulting in a cash-flow shortage for businesses, he said.
Meanwhile, high-tech analysts say that in the short term the ongoing lockout will have little impact on Taiwan's IT industry, but if the freeze continues beyond next week, it will start to cut into profit margins.
"Taiwan's mainboard manufacturers will be affected if the dispute continues for more than a month," said Roger Tseng, an analyst at Masterlink Securities Co.
Hardest hit would be bulkier products such as printers, scanners, fax machines and mainboards which are usually shipped to the US by sea, he said.
Alternative methods of shipping, such as air freight, would not make sense for most Taiwanese manufacturers hoping to get their goods to the US in time for the holiday shopping season, given the high cost.
Quadrupling costs
For example, the cost of shipping one mainboard by sea is NT$0.7 per unit. That figure would more than quadruple to NT$4 per unit if sent by air, Tseng said.
"Profit margins on mainboards are already between 8 percent and 15 percent per unit and would be further cut by between 0.2 and 0.3 percent each due to the lockout," he said.
Fortunately, Europe accounts for a large percentage of mainboard shipments at present, with only 20 to 30 percent of current orders headed to the US, Tseng added.
Meanwhile, an official of the Hsinchu Science-based Industrial Park (新竹科學園區), home to many of Taiwan's semiconductor manufacturers, was not worried.
"As 70 percent to 80 percent of the park's output in terms of value is shipped by air to the US, the impact of the labor dispute will be minimal," said Yen Tzung-ming (
"If the strike goes on for one week, there will be no problems at all."
He added that a more protracted dispute would only affect ships currently at sea, as manufacturers would switch to air freight.
The shutout of unionized workers was ordered on Friday by the Pacific Maritime Association, representing employers, after complaining about longshoremen conducting a work slowdown to increase their negotiating leverage in contract negotiations.
Holiday madness
The ports handle about half of the US' ocean-going cargo, including vehicle, electronic, garment and sporting goods imports.
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