Shipping shares in Asia tumble after US dockworkers pause strike

SHIPPING stocks across Asia slumped after dockworkers at US East and Gulf coast ports agreed to suspend their strike, curbing expectations container rates will increase due to reduced supply.

Japan’s Kawasaki Kisen Kaisha sank as much as 13 per cent in Tokyo, while Mitsui OSK Lines slumped more than 9 per cent. In South Korea, Pan Ocean slipped as much as 5.5 per cent and Korea Line also fell, while Hong Kong-listed Cosco Shipping Holdings plunged over 12 per cent in early trading. Thailand’s Regional Container Lines will also be in focus when markets open there.

“The view had been that the container shipping market would rise as a result of the strike continuing,” said Tsuyoshi Hori, an analyst at Mito Securities in Tokyo. The suspension means that “hope was dashed, and short-term traders are already reversing their trades”.

US dockworkers have agreed to start moving cargo again while they continue collective bargaining with their employers on a new contract, the union representing the workers said on Thursday (Oct 3). Container ports from Houston to Miami and up to Boston have been closed since the labour contract expired on Tuesday.

The port strikes had been expected to provide some support to container rates after several weeks of declines, Bloomberg Intelligence analysts wrote in a report earlier this week.

Those who had hoped shippers’ business performance would improve are selling, said Ikuo Mitsui, a fund manager at Aizawa Securities. “But geopolitical risks are unlikely to subside, and freight rates are unlikely to fall excessively. If the share price falls, investors aiming for dividend yields will likely buy.” BLOOMBERG