The investment bank Stifel Nicolaus said Thursday that some air freight forwarders with strong exposure to the Asia-North America trade could benefit from the ongoing labor dispute between unionized clerks and their employers at the ports of Los Angeles and Long Beach.
Stifel Nicolaus noted Expeditors International and FedEx are in particularly advantageous positions, given the disruption the dispute is causing. The strike began Tuesday at noon when clerical workers representated by the International Longshore and Warehouse Union Local 63 Office Clerical Unit set up pickets at a single facility, the APM Terminals (APMT) Pier 400 facility in the Port of Los Angeles.
The picket was honored by ILWU longshore members and on Wednesday spread to all terminals in the two ports.
“If there are disruptions in freight moving through the West Coast ports over the next month, that could lead shippers to increase air freight usage to get goods to market, which would potentially benefit airfreight forwarders like Expeditors International, UTi Worldwide, Kuehne + Nagel, and Panalpina,” Dave Ross, managing director of Stifel Nicolaus Transportation & Logistics Research group, wrote in a note Wednesday afternoon. “It could also increase volumes for airfreight carriers like FedEx and UPS. Due to their transpacific exposure, we believe the biggest beneficiaries of any significant work stoppage at West Coast ports would be Expeditors and FedEx.”
On Thursday, Ross added that Expeditors was a beneficiary of the last major disruption at the ports of Los Angeles and Long Beach, the 10-day lockout of ILWU members in 2002.
“If this continues for a prolonged period or spreads further along the West Coast, it would seriously disrupt supply chains,” he said. “Supply chain disruption would leave shippers scrambling to find new ways to move freight, and in the transpacific trade lane, Expeditors is the leading logistics player to help, in our view.
“The company has said it looks for good market share and that good market share appears when capacity is tight; we believe a prolonged/expanded port strike could tighten capacity on the air and ocean. In 2002, when the ports were disrupted, (Expeditors) was one of the biggest beneficiaries, so we believe it could be again here, if the situation worsens. Difficult times allow well run companies with capacity and know-how, like Expeditors, to thrive,” Ross said. - Eric Johnson