Tue, Feb 17, 2015 - Page 15 News List

US ports dispute hits Asian supply lines


A labor dispute at ports on the US west coast is disrupting supply chains across the Pacific, forcing some Asian suppliers to resort to costly air freight and pushing up shipping rates, as more freighters are caught up in long lines to dock.

With ports near gridlock and cargo delays being felt throughout the nation’s economy, US President Barack Obama on Saturday dispatched US Secretary of Labor 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 US 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 US.

Japan’s Honda Motor Co said on Sunday the firm 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,” company spokesman Mark Morrison said.

Honda and other carmakers have already started transporting some crucial parts from Asia to their US factories by airplane.

Fuji Heavy Industries Ltd, maker of Subaru cars, said it would continue flying parts to its US factory beyond an initial arrangement through the end of this month, which it previously said would cost an extra ¥7 billion (US$59 million) per month.

Toyota Motor Corp, 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 said it had been slightly affected.

With dozens of ships caught up in lines 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 US west coast freight rates rose 23 points last week to 2,265, and brokers said quotes had risen a further five points yesterday.

The dispute is also affecting volumes. Singapore-listed Neptune Orient Lines Ltd’s 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.

Hong Kong Liner Shipping Association secretary Roberto Giannetta said the effects were being felt across the industry, as shippers looked for ways around the delays.

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 Inc, a supplier of US 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.”

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