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Asian Shippers Seek Port Closure Workaround - 2002-10-01

Asian exporters are looking for new ways to ship their goods to the United States after port operators on the West Coast locked out dock workers.

America's West Coast ports handle about half of the nation's ocean-going cargo, including imports of cars, electronics, garments, housewares and sporting goods - all made in Asia.

For Asian companies dependent on the U.S. market, trouble at the ports can quickly get expensive, as orders pile up or cargo sits in warehouses. The lockout is made worse by the timing; it comes just as Asian factories are shipping tons of goods for the U.S. holiday season at the end of the year.

"If you look at areas we focus on, which is the Asia shipping sector, the perspective revenue impact could be somewhere between $30-35 million for a 10-day stoppage," said David Lepper, a transport and shipping sector analyst with investment bank UBS Warburg in Hong Kong.

He added that losses to shippers are only the beginning; Asian distributors and manufacturers could also suffer if action is prolonged.

A long-festering labor dispute has shut down 29 ports on the West Coast. Those ports handle about $300 billion in trade annually, and analysts estimate that the work stoppage could cost the U.S. economy as much as $1 billion a day.

Mr. Lepper says most shippers have contingency plans. Those plans, however, will not entirely avoid cargo from piling up on docks.

"They have planned to ship through Vancouver or reroute cargo through the East Coast," he explained. "The problem there is capacity constraints. Firstly, Vancouver can only handle so many containers. Secondly, we have a situation where rail can only take on a number of additional trains; and thirdly, there's only so many vessels that can actually on a regular basis use the Panama and Suez Canal."

If negotiations fail to end the problem, the U.S. government may invoke an 80 day cooling off period under national labor law. That would reopen ports and force both parties to resume dialogue after the critical holiday shipping period is over.