BLOOMBERG NEWS
A sign bearing the logo of the International Longshore and Warehouse Union was affixed to a locked gate at the Port of Los Angeles this morning.
Port lockout could Singapore >> Asian exporters may fail to deliver goods in time for Christmas and manufacturers are running out of space to store undelivered cargo as the U.S. West Coast port dispute blocks the nation's gateways for a second week.
steal Christmas
Asian exporters may struggle to meet
Panel named to calculate impact of dock dispute
U.S. demand if dispute continues
By Tan Hwee Ann
Bloomberg NewsExporters such as Sony Corp. and Japanese automakers are looking for alternative ways to ship goods including airfreight, pushing prices for air cargo with set delivery times as much as 70 percent higher than standard rates, said Mark Noske, Emery Worldwide's Singapore-based South Asian area operations manager.
"All the ships are still sitting there and by the time they come back and turn around, Christmas would be over," Noske said. "This would have a massive impact unless you can airlift but everybody is scrambling for the same space."
The port standoff will soon start forcing some port operators and shippers to turn away goods because containers are piling up in ports.
"We have had no containers returning from the U.S. for almost two weeks now -- the inventory in Asia is running out," said Osamu Suzuki, head of terminal operations at Mitsui O.S.K. Lines Ltd. Shipping companies in Asia may soon have to stop accepting cargo from exporters, he said.
Trans-Pacific trade accounts for 16 percent of container traffic.
Many exporters may have no choice but to send goods by air or else miss having their products in the stores for Christmas, freight forwarders and shipping lines said.
"Liners have no alternatives because no other ports can handle this volume," said Francis Lo, the Hong Kong manager of Airborne Express, a unit of the third-largest U.S. air delivery service company Airborne Inc.
Canada's Vancouver port authority said last week it wouldn't accept cargo diverted from the United States.
Ships may only return to Asia in mid-November, which means some goods would only make it to the stores for "last-minute Christmas sales or even only for the New Year," Mitsui O.S.K.'s Suzuki said.
About 70 percent of the toys sold in the United States are made in China, and U.S. importers probably don't want low-value items such as toys sent by air, the Hong Kong Trade Development Council said.
"We have already shifted some product shipments to air transportation to the U.S.," said Hiroko Saito, a spokeswoman for Sony, the world's second-largest consumer-electronics maker.
Both Toyota Motor Corp. and Honda Motor Co., Japan's two largest automakers, have arranged to airlift parts to maintain production in the U.S.
Air freighting knock-down parts "in some cases" can cost Toyota as much 100 times more than shipping the parts by sea, said Yukitoshi Funo, a Toyota director overseeing North American operations.
Toyota President Fujio Cho said the company's U.S. plants can probably continue operations for an average of 20 days if the port dispute remains unresolved. Toyota last week halted production at its New United Motor Manufacturing Inc. venture with General Motors Corp. because of the dispute.
Nissan Motor Co., Japan's third-largest automaker, said last week the dispute may reduce its October sales at least 10 percent. Nissan has enough parts to continue production at its Tennessee plant until Friday.
Korean Air Co., the world's No. 4 cargo airline, will add seven cargo flights to the United States during a two-week period this month to meet demand, said Crimson Lee, a Korean Air spokesman. Korean Air usually flies 46 cargo flights to the U.S. each week.
"We're seeing an increase in demand to ship clothing items and auto parts," Lee said.
Emery, a unit of California-based CNF Inc., is considering chartering more flights to meet the increased demand for information technology products, Noske said.
Exel Plc, a U.K. airfreight and trucking company, has booked six chartered flights in the past four days to carry cargo out of Southeast Asia, said Henrik Lund, the company's airfreight director for Asia Pacific.
"There's clearly going to be a premium due to the increased cost of operations," said Lund.
Pacific Maritime Association
International Longshore and Warehouse Union
