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 Ltd. sank as much as 13% in Tokyo, while Mitsui OSK Lines Ltd. slumped more than 9%. In South Korea, Pan Ocean Co Ltd. slipped as much as 5.5% and Korea Line Corp. also fell, while Hong Kong-listed Cosco Shipping Holdings Co. plunged over 12% in early trading. Thailand’s Regional Container Lines PCL 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 Co. 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 in a statement Thursday. Container ports from Houston to Miami and up to Boston have been closed since the labor contract expired 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 Co. “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