Shipping boss Stamatis Tsantanis is warning that this is the “worst possible time” for a US port strike.
The chief executive of Nasdaq-listed Seanergy Maritime and United Maritime fears consequences for the supply chain into Christmas and beyond.
Analysts have speculated that container liner operators could see freight rates boosted after it was confirmed a strike on the US East Coast and Gulf of Mexico will go ahead from Tuesday.
The International Longshoremen’s Association union said on Sunday that members will walk out at 36 container and car carrier terminals.
Tsantanis’ companies have combined fleet of 25 bulkers and tankers that typically use Baltimore on the East Coast.
The CEO said there would be no immediate impact but instead a ripple effect until the situation normalises.
He explained that the effect of delays cascades into subsequent destinations.
“So that impact doesn’t happen immediately but you feel the impact down the line months after,” Tsantanis said.
“Every idle day that a ship does not get into the port costs money and sometimes a lot of money which only increases the customer cost and then that ultimately gets passed onto consumers,” the CEO added.
“The impact of a strike now is going to be way more impactful for Christmas and not next week, or the week after that. Those ships will take longer to make their round and come back and that creates a backlog. Now that everybody’s stocking up for Christmas because now is the time when it actually impacts the Christmas shopping season,” Tsantanis said.
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Describing October as the worst possible time for a port strike, he said that it does not mean that kids will be without toys on Christmas.
“But it can seriously affect goods coming into the US,” he said. “Port strikes are rare and people in the shipping industry are used to weather delays which are similar.”
“Things like a cyclone, typhoon or hurricane impact the whole supply chain and that’s very bad for the consumer. You don’t see the effect immediately since the backlog it creates can take weeks to manifest,” Tsantanis said.
He said that even with a two-week strike, ports would not be expected to be back to normal operations until the start of 2025.
Eric Clark, a portfolio manager at investment firm Accuvest Global Advisors, said the port strike has the possibility of having a “very bad” outcome.
“The labour union’s job is to get the best wages for workers, but our ports are woefully inefficient relative to other global ports,” said Clark, who is responsible for Accuvest’s research and is focused on its Alpha Brands economy-driven investment strategy.
“These unions fight innovation and automation and the more they try and hold the economy hostage for personal gain, the more this innovation and automation will be forced on them.”
Clark argued that the unions know how important East Coast ports are to the economy.
“So they have a strong hand, and they are playing it forcefully here,” he said.
“I would be shocked if this lasted more than a week due to the domino effects from the strike growing exponentially the longer a strike happens.
“It will not shock me if the labour unions make people sweat for up to a week to help drive a positive deal for them,” the investment manager added.
