U.S. East Coast port disruptions could dent Indian exports

The strike by workers across 36 ports along the U.S. East Coast and the Gulf of Mexico could have a deleterious effect on trade flows from Asian countries, and India is one of four nations that have a high reliance on the ports that have come to a standstill, Moody’s Analytics said on Wednesday.

The ports affected by the strike called by the International Longshoremen’s Association, handle almost 55% of the container traffic moving in and out of the U.S. and include the largest 14 ports. While the disruptive effects of the strike will depend on how long it persists, Asian producers will be in the firing line if shipments from them to the U.S. are affected, the firm said in a report.

More than 20% of total Asian seaborne exports to the U.S. pass through the 14 largest affected ports, accounting for almost half of total inbound trade, the report noted, adding that countries with a high concentration of exports to the U.S., coupled with high reliance on the disrupted ports, will face the biggest headaches.

While Cambodia is expected to be the hardest hit, Moody’s Analytics’ report said that India, Indonesia and South Korea also have an “outsize reliance on the striking ports”.

The three countries, it said, had a “reasonable export concentration to the U.S.” and high reliance on the disrupted ports. This is the first strike in America’s East Coast ports since 1977, when a similar union action lasted 44 days.

“If the parties can come to an agreement to restart operations within a week or two, the macro impacts will be minimal. If things drag on longer, that pain will spread further, with backlogs leading to shortages and rising price pressures,” the report flagged as possible adverse effects. For Asia, these shortages would be centred on commodities, including crude and refined petroleum as well as electronics imported from the U.S.