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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (19072)	5/18/2002 2:34:27 AM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

Hi DJ, before you go relaxing on me, beering and painting, embed this in your mind and cerebrally chew while beering/painting (tell me if you decide running wildly in ever smaller circles is warranted): E-mail Received Yesterday QUOTE This is really worrisome. Could this dramatically affect HK stocks? Specifically, Li & Fung, Hutchison, and big exporters such as Yue Yuen and the textile producers? Not to mention US retailers such as Walmart. Any comments? Mac Friday, May 17, 2002 Labour action likely in US as both sides fail to compromise Union stands fast on demands for concessions from west coast employers PAUL RICHARDSON in London -------------------------------------------------------------------------------- An APL vessel calls at the Port of Los Angeles. A full closure of US west coast ports would cost the country almost US$1 billion a day in lost revenue. Port workers on the west coast of the United States appear more likely to begin work action late next month after the opening sessions of contract negotiations between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) showed little compromise. Internal documents obtained by Business Post suggest the ILWU is adamant it will not accept proposals for productivity improvements at the ports without concessions from the PMA, which represents port employers. The documents revealed full closure of the ports would cost a recovering US economy almost US$1 billion a day in lost revenue. However, a slowdown would subvert the Government's ability to enact back-to-work legislation and force shipping lines to find alternate routes to and from the main US gateways. About 25 per cent of Hong Kong's overall laden throughput was linked to the US market last year. Of the 2.8 million teu (20 ft equivalent units) generated by trade with the US, almost two million teu went through US west coast ports. Some alternate services which directly connect China, South Korea and Japan with the US market have been switched to the Panama Canal route to the US east coast. Although the route takes up to 10 days longer, it is already threatened by overcapacity. The Mediterranean Shipping Co and Grand Alliance member carriers, which include Orient Overseas Container Line, will by next month have injected more than 350,000 teu of annualised capacity on the trade line, which is not preferred by their customers. The labour contract expires on July 1 but, according to the documents, a new deal is unlikely to be struck by that date, or even weeks after. The PMA, a powerful body of shippers and carriers assembled to negotiate labour contracts, signalled its intent to gain productivity concessions from the ILWU in this round of negotiations to cut congestion delays and costs. The ILWU was concerned about job losses from proposed technological enhancements and was pushing terminal safety measures, as well as retirement and pension concessions. According to the documents, a full strike is unlikely. It would allow the Government to legislate an 80-day cooling-off period in which the workers will have to return to work while negotiations continue. Shipping lines said the fear of a work slowdown was the main factor behind a recent rise in box volumes on the Pacific, not a resurgent US economy. First-quarter figures for the Port of Los Angeles indicate a comparative 22 per cent growth in throughput volume. The China Ocean Shipping Co (Cosco), China Shipping Container Lines (CSCL) and carriers from Japan and Taiwan said the inflated figures were being driven by shippers rushing to push volumes through the west coast ports before industrial action took hold. Cosco and CSCL said customers were increasingly uneasy about getting their products to the US market after June 27, which would affect all cargo shipped from Asia after the July 4 public holiday. A senior executive at CSCL said: "Our ships are sailing full and our slot allocations with other lines are full quota. But figures for July outbound from China are nowhere near that level. Our customers are demanding their cargoes clear US west coast ports well before any industrial action takes place." A proposed general rate increase on the transpacific of US$300 per feu (40 ft equivalent unit) set for next month is far short of being accepted as the uncertainty about labour action continues. With more capacity switching to the Panama Canal route, there are concerns of a possible rate war as lines try to fill the new supply. A South Korean shipping line executive said: "The Asia-US trade lane is fast becoming a problem area. Reports of a strong recovery in the US economy are untrue from our viewpoint. We just need to ensure our cargo moves to and from the market with limited disruption during this time. If that means stock piling, then we have to follow that path." UNQUOTE Chugs, Jay