US Ports Lockout Hurt Sino-US Bilateral Trade

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Last updated at: (Beijing Time) Wednesday, October 09, 2002

US Ports Lockout Hurt Sino-US Bilateral Trade

The lockout at US West Coast ports has left Chinese shipping firms and exporters biting their nails over the daily-compounding losses and fretting over lost business opportunities.

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The lockout at US West Coast ports has left Chinese shipping firms and exporters biting their nails over the daily-compounding losses and fretting over lost business opportunities.

A senior Sino-US trade official, urging quick resolution of the labour strife, said the closure puts a heavy strain on booming bilateral trade.

"The closure of US West Coast ports has been a hammer blow,'' said Li Ping, deputy general manager of the Beijing cargo subsidiary of China Ocean Shipping (Group) Company (COSCO).

The firm now has a dozen cargo ships stranded outside ports along the US West Coast, operation of each costing thousands of US dollars each day.

Some of the containers have missed their delivery time and although shipping firms are not responsible for losses due to events beyond their control, the episode may leave a bad impression of the shipping firms on clients, Li said.

"What's worse, the lockout disrupts COSCO's shipping routes and sends our operation into disorder.''

Li said the firm is considering halting shipments to the US West Coast in the latter half of the month if the ports are not open by then.

Xu Tianpeng, an official with the Taiwan-invested Wan Hai Lines Ltd in Xiamen of East China's Fujian Province, said the firm has two ships anchored outside US ports at present and has already stopped sending more.

Xu expects more firms to follow suit if the ports remain closed for the next week.

If the lockout lasts into the fourth quarter, the port closure could deal a devastating blow to Chinese exporters to the United States, said Zhou Shijian, vice-president of the China Chamber of Commerce for Import and Export of Minerals, Metals and Chemicals.

Zhou, an expert on Sino-US trade relations, said bilateral trade has fared very well in the first eight months of this year on the strength of the US economic recovery and a depreciating US dollar. Total trade volume is expected to reach a record high US$95 billion for the whole year.

Chinese customs statistics show that Sino-US trade increased 22.7 per cent to US$60.2 billion in the first eight months of this year.

Among all Asian trading partners of the United States that will be hurt, China will be hit especially hard because the majority of Chinese exports to the United States are low-price, low value-added consumer products that depend heavily on water transport, said Zhou.

The fourth quarter of this year is crucial to Sino-US trade as 60 per cent to 70 per cent of US consumption is done in the season, which has important holidays including Christmas and New Year.

Zhou said US consumers might feel the pinch if the port closure lasts through the fourth quarter, but that Canadian and Mexican producers may take advantage of the vacancy to supply the US market.

Hu Min, an official with the China Chamber of Commerce for Import and Export of Textiles, said member companies are actively seeking alternative ways to move their products to the United States, such as through Canada, Mexico or via East Coast ports.

But industrial experts think there are limited sea-based cargo alternatives to the West Coast's 29 ports, which handle about half of the nation's water borne cargo and are the primary gateway for the United States' booming trade with Asia. Even with new routes, the higher transportation costs would deal a heavy blow.

The port of Vancouver in British Columbia, Canada, is already operating at capacity, while Mexican ports are small and ill-equipped to handle large vessels. In fact, many modern cargo freighters cannot fit through the Panama Canal to reach US ports on the East Coast.

Air cargo is another option. A Federal Express statement said some businesses are considering "shifting their freight from the ocean to the air'' in order to reach customers before the holiday season.

But it's simply too expensive for heavy or low-margin goods such as toys, apparel, furniture or agricultural commodities to go by air cargo, said logistics experts.

"You can't take a container load and switch it over to air freight,'' said Li Ping. "The cost will be too high to squeeze out any profits.''

Source: China Daily contributes to this report

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