Container ship equities are getting a lift from disruption risk at the US west coast ports of Los Angeles and Long Beach after both ports temporarily shut down late last week as a result of labour shortages, according to an analyst.
Thousands of unionised dockworkers did not show up for work on Thursday or Friday, forcing the ports to shut down operations on both days.
The Pacific Maritime Association accused the International Longshore and Warehouse Union (ILWU) of withholding labour in an effort to disable the ports as both sides negotiate a new labour contract to replace one that expired in July 2022.
The ILWU refuted the association’s assertion, stating that the workers skipped work on Thursday to attend a general meeting and did not show up at the docks on Friday to observe the Good Friday holiday.
The labourers returned to work on Monday, although both parties have still yet to settle on a contract.
Whatever the case may be, Jefferies analyst Omar Nokta is certain on one thing: the risk of further disruption to the ports as a result of the impasse is boosting container ship equities by threatening supply.
“A confluence of several factors appears to have driven the strength, including disruption risk brought on by dockworker strikes at the Ports of Los Angeles and Long Beach,” he wrote in a note on Wednesday.
He especially noted that shares of New York-listed liner operator Zim gained 13.5% on Tuesday to close at $20.02 per share. Its stock has risen another 2.3% to $20.46 per share by Wednesday’s midday trading.
Several other New York-listed boxship owner stocks gained on Tuesday and continue to rise modestly on Wednesday.
Costamare shares rose 1.2% to $9.67 per share by midday on Wednesday, while Euroseas shares edged up 0.7% to $18.88 per share.
Global Ship Lease stocks improved 0.6% to $19.57 per share by midday on Wednesday.
Nokta also attributed the upward share prices to major liners seeking to boost their general rate increase (GRI) by $500 to $600 per feu.
“It remains to be seen how the strikes will play out and also whether the GRIs will stick, but for now there appears to have been a bottom set in the market and opportunity for improved earnings in the near-term,” he said.
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