European automakers most affected by U.S. port strike - analysts

 European automakers are likely to be the hardest hit by the dockworkers' strike on the Atlantic and Gulf coasts, but a longer strike could have wider repercussions for the industry if it impacts suppliers, analysts say.

Dock workers began their first large-scale strike in nearly 50 years this morning, blocking the flow of about half of domestic shipping.

The International Longshoremen's Association union, which represents 45,000 dock workers, is negotiating with the United States Maritime Alliance (Usmx) employers' association on a new six-year contract.

"A lot of car shipping happens on the East Coast, especially at the Port of Baltimore," said Steve Hughes, Ceo of Hcs International, which advises the auto industry on shipping issues. "If (the strike) becomes a matter of weeks, it will be a tragedy."

In the past 12 months, striking ports have handled $37.8 billion worth of vehicle imports, Hughes said. And that's not including auto parts, which are used for both vehicle manufacturing and the aftermarket, he added.

"If you look at a GM car, you will find all kinds of European and Asian parts inside it," Hughes said.

The Motor & Equipment Manufacturers Association, a trade association of automotive suppliers, called on President Joe Biden and his administration to force both sides back to the negotiating table.

A shortage of parts could lead some automakers to reduce vehicle production, although analysts say some may instead quietly welcome this eventuality. Stellantis , for example, has very high vehicle inventories.

Dan Levy, an analyst at Barclays, said that 70 percent of auto parts imports into the United States are through the ports affected by the strike, although companies have probably built up some stockpiles since the risk of the strike had been visible for some time. If automakers were forced to get parts by air, costs could rise.

"This is all very, very inflationary," Hughes said.

European automakers, many of which rely on the striking ports, would suffer the most, Levy wrote in a research note.

"European automakers rely heavily on Baltimore for imports and Southeastern ports (e.g., Charleston) for exports because most of their U.S. production is in this region," he said.

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