U.S. ports shutdown threatens to sink Asian economies

U.S. ports shutdown threatens to sink Asian economies

Martin Abbugao, Agence France-Presse, Singapore

The ports shutdown in the United States is threatening to
scuttle Asia's export-led economic rebound, analysts have warned,
as exporters scramble for alternative routes and governments mull
emergency plans.

The closure of 29 ports on the U.S. west coast due to a labour
dispute could cut a swathe across the region, affecting
everything from Australian citrus to Japanese auto parts,
Singaporean electronics goods to Chinese textiles, analysts said.

Although a number of ships from Asia have been stranded at sea
unable to deliver their goods, the impact has been limited after
a week.

But as the dispute begins its second week on Monday, some
analysts and officials fear a bloodbath if it runs for a month or
more and many hope U.S. President George W. Bush will intervene.

"The question is when the disruption of the supply chain
becomes irreparable," said John Casey, a regional transport
analyst with DBS Vickers Securities in Singapore.

A lockout lasting more than a month will lead to a "complete
breakdown in the Asia-U.S. supply chain, which means there is an
impact on U.S. retail sales, on Asian exports as well as a whole
slew of transport-related businesses", he said.

One billion dollars worth of Asian exports pass through ports
on the U.S. west coast daily, and the damage will almost double
if distributor and retailer margins are added, he said.

Hong Kong and Singapore, two of the region's busiest ports,
will be among the most affected. The ports closure could
prematurely end Asia's export-led rebound from last year's global
economic slowdown.

"I believe that if the shutdown lasts for more than one month,
East Asia would be in recession. The consequences for the global
economy are horrendous," said Morgan Stanley's Hong Kong-based
regional economist Andy Xie.

Taiwan was the most optimistic, with one Taipei-based
economist saying Taiwan does not expect grave loses as most of
its exports to the United States are high-tech items that are
shipped via air freight.

But Hong Kong's Economic Development and Labour Secretary,
Stephen Ip, said he was worried about a prolonged shutdown.

The United States is Hong Kong's second most important export
market after China, taking 21.3 percent of re-exports last year
and 31 percent of domestic exports.

Hong Kong Shippers Council executive director Sunny Ho said
shipping companies had started rejecting outbound bookings of
general merchandise goods because of the backlog of cargoes on
the west coast.

"This is just a tip of the iceberg," Ho said. "The problem
will worsen if the matter is not resolved soon."

South Korean government officials and shipping companies are
also concerned about a protracted lockout.

"Some 63 percent of our shipments to the United States enter
ports on the western coast. We only keep our fingers crossed,
hoping the strike may be over at the earliest possible date," an
official of the Ministry of Maritime Affairs and Fisheries said.

Australian Agriculture Minister Warren Truss said the
country's rural sector, already devastated by severe drought,
stood to lose "many millions of dollars".

"Australian citrus and chilled meat exports to the U.S. could
be severely cut back because of this strike at a time when
producers need all of the help they can get to maximise their
returns," Truss said.

The Australian Meat Council said between 4,000 and 5,000
tons of beef and 2,000 tons of lamb and mutton were currently at
risk in ships unable to dock.

Meanwhile. the chairman of the Manila-based International
Container and Terminal Services, Enrique Razon, has urged the
Philippine government to draw up a contingency plan in case the
lockout drags on.

Singapore's Neptune Orient Lines said at least six of its
ships were stranded off the U.S. western seaboard.

And air freight costs in Singapore have shot up by up to 70
percent, driven by a scramble to use air transport to ferry goods
to the United States.

A spokesman for Mitsui O.S.K, Lines Ltd., Japan's second
largest shipping firm, said four of its ships were stuck in the
Pacific Ocean. The vessels carry containers filled with goods
ranging from auto parts to shoes, kitchen equipment and
furniture.

"Many of these products are supposed to go to Wal-Mart," the
spokesman said, referring to the U.S. retail chain.

And Nippon Yusen K.K., Japan's biggest shipping company, said
13 of its ships were lying off ports on the west coast.

Masahi Honda, a spokesman for Japanese automaker Toyota Motor
Corp., said production at its joint venture plant with General
Motors in California was halted and overtime work cut at its
plants in Canada, Kentucky and Indiana because spare parts could
not be delivered.

However, aside from the Taiwanese, there are others who do not
see all economic gloom.

Akihiko Suzuki, an economist with UFJ Institute Ltd. in Tokyo
said a prolonged shutdown would not affect GDP growth as other
routes could be taken to deliver the goods.

Standard Chartered Bank said the United States could still
import from Asia through the Panama Canal to ports on the Gulf of
Mexico or the U.S. East Coast.