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.