Shipping Firm Shares Decline After US Dockworkers Reach Strike Settlement

Shares of AP Moeller – Maersk and other shipping companies in Denmark faced declines on Friday after news broke that port workers in the United States had concluded their largest work stoppage in nearly fifty years.

Dockworkers across the East and Gulf coasts had been on strike for several days but suspended their actions following an agreement reached on Thursday between their union and the organization representing major ocean shipping firms.

The strike resulted in the closure of ports from Maine to Texas, severely impacting the U.S. economy by disrupting supply chains and affecting imports of essential goods such as food and pharmaceuticals. Analysts from JPMorgan estimated that the strike cost the economy up to $4.5 billion each day.

The preliminary agreement will provide for a wage increase of approximately 62% over six years, according to reports from two sources. This figure is positioned between the 77% increase demanded by the International Longshoremen’s Association and the nearly 50% increase offered by the United States Maritime Alliance.

In their joint statement, the International Longshoremen’s Association and the United States Maritime Alliance indicated they would extend their master contract until January 15 of the following year. However, significant concerns persist, particularly regarding the potential job losses due to increased automation at ports.

Shares of various shipping groups, including Germany’s Hapag Lloyd, Switzerland’s Kuehne & Nagel, and several others in Taiwan and Japan, also dropped in value. Investors who had been anticipating a rebound in freight rates due to the strike were seen selling their shares following the announcement of the resolution.

Analysts noted that while the end of the strike is a positive development, its impact on the broader equities market is expected to be relatively minor. They pointed out that had the work stoppage continued for a longer period, the market response might have been more robust, but given that the strike lasted only a few days, the reaction has been subdued.