Freight rates expected to normalize after US dockworkers suspend strike, causing shipping stocks to fall
Global shipping stocks dropped sharply after US dockworkers ended their strike following just three days of industrial action, sparking predictions of a reduction in sea freight prices, BNN Bloomberg reports.
The quick resolution of the strike led to significant market reactions, with shipping companies worldwide seeing their stocks fall.
In Copenhagen, AP Moller-Maersk A/S shares plunged by 8.6 percent, marking its steepest decline in eight months. German competitor Hapag-Lloyd AG saw an even larger drop of 14 percent.
Similar declines were observed in Asian markets, with Cosco Shipping Holdings Co. and Kawasaki Kisen Kaisha Ltd experiencing substantial losses, and ZIM Integrated Shipping Services Ltd dropping in New York premarket trading.
Analysts from JPMorgan Chase & Co. believe the quick reopening of US East and Gulf coast ports will affect a market that is already oversupplied.
“Now the strike has lasted just 72 hours we see limited knock on effects and expect freight rates will continue to normalize,” wrote Alexia Dogani and her team in a note.
The union representing the dockworkers confirmed that cargo movement resumed as they continue negotiating with employers for a new contract.
Ports from Houston to Miami, including up to Boston, had been closed following the expiration of their previous contract.
Asian shipping stocks were hit hard by the news, reversing gains made in recent weeks as the threat of industrial action loomed.
In Tokyo, Kawasaki Kisen Kaisha shares closed down 9.7 percent, while Pan Ocean Co. in South Korea fell by 5.4 percent, and Hong Kong-listed Cosco dropped by 7.3 percent.
Tsuyoshi Hori, an analyst at Mito Securities Co., commented, “Short-term traders are already reversing their trades.”
