US Port Strike Hits East Asian Groups

October 3, 2002
By Bayan Rahman and Ken Hijino in Tokyo, Joe Leahy in Hong Kong, Betty Liu in Atlanta and agencies


Toyota, Nissan, Sony and other leading Japanese companies are being forced to suspend production or find other ways to send exports to North America because of the trade dispute that has shut down 29 ports on the US west coast.

Other Asia-Pacific industries and countries have been hit by the lockout. A Morgan Stanley analyst warned on Thursday that a prolonged dispute could push east Asia into recession. Japanese ships carrying cars, components and other products have been unable to unload or reload because of the confrontation between the US Pacific Maritime Association and the dockers' union.

Sony, the consumer electronics group, has started sending computer components by air. Toyota was forced to stop production of commercial vehicles for two days at its plant in Fremont, California. Passenger car production was halted for one day. Nissan will halt production on Saturday at its Tennessee plant.

"All the carmakers are vulnerable," said Chris Redl, car industry analyst at UBS Warburg.

Nissan said: "We are hoping to continue with only reduced production to the end of next week, but beyond that, we would be forced to stop production."

The dispute could hit trading companies Mitsui and Mitsubishi, which use the west coast ports for 70 to 80 per cent of their import and export trade between North America and Japan.

"If the shutdown lasts for more than one month, east Asia would be in recession," said Andy Xie, economist at Morgan Stanley in Hong Kong. "The consequences for the global economy are horrendous."

Exports to the US accounted for 10 per cent of gross domestic product in east Asia excluding Japan, Mr Xie said, and had been the main driver of an economic recovery in the region this year.

United Parcel Service, the world's biggest parcel carrier, said it was adding cargo flights between the US and Asia, but these would handle only a "very small piece" of shipments.

Many Japanese companies remain vulnerable because of their reliance on just-in-time production. Most are seeking other ports in Canada or Mexico but Kawasaki Kisen, a shipping company, said they lacked the capacity to handle the volume of cargo blocked out of the US.

According to Mitsui OSK Lines, the industry average daily cost for one stranded ship is about Y3m (€24,700).

FedEx, the world's largest air express carrier, said its phones had been ringing "in earnest" from companies anxious to ship their goods to the US.

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