US port strike could cost $2bn per day
The economic impact of a trade-paralysing US port gridlock will double to nearly two billion dollars a day this week, experts warn.
While the week-old shutdown of all 29 ports on the United States' west coast has been robbing the US economy around one billion dollars a day, the cost will skyrocket to around 2.4 billion a day within two weeks, a top economist said.
"After 10 days of shutdown, the financial impact to the US economy starts to approach 1.9 billion per day as the escalating impacts of the closure begins to take hold," said economist Mr John Martin.
"After 20 days, that impact will rise to 2.4 billion dollars every day as the problem is compounded by growing backlogs and spiralling costs in a huge range of areas," he added.
Mr Martin is the president of economic consulting firm Martin Associates, which produced a report on the likely consequences of a ports closure for the Pacific Maritime Association - the industry group that indefinitely locked 10,500 unionised dock workers out of its ports on September 29th.
That report estimated the initial daily economic loss of a closure to run to around a billion dollars a day, but Martin now says his predictions were conservative and that far more damage is being wrought.
"The inventory costs rise with each passing day and you are looking at some pretty significant lost sales, especially now that we are looking to the critical Christmas season."
Compounding the lost sales caused by stranded container cargo piling up as more than 150 ships hover off the west coast hoping for a break in the contract dispute that sparked the lockout, are a host of other charges.
Some retailers have begun to run out of imported stock, while the biggest vehicle plant in the western half of the United States was forced to shut down its California operations overnight Wednesday after it ran out of parts.
In addition, transport costs are skyrocketing, with international air freight now costing as much as 10 times the price of sea freight, while US haulers and railways are being forced to charge more expensive one-way rates for freight as no cargo is heading towards the west coast.
But as the crisis bites deeper into the fragile US economy amid fears of a new recession sparked by the stoppage and jitters over a possible war with Iraq, Asian countries that depend heavily on the US market for their export goods are becoming increasinglyvulnerable.
"I am really starting to become concerned that there is a veryserious risk of a major backwards impact over the Asian economiescause by this shutdown," Mr Martin said.