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Will Airlines ETFs Gain as Strikes Disrupt US East and Gulf Coast Ports?
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On Oct. 1, 2024, dockworkers at U.S. ports along the East Coast and Gulf Coast launched their first major strike in almost 50 years, following the collapse of contract renewal talks. Around 50,000 port workers, represented by the International Longshoremen's Association (ILA), initiated the work stoppage after their six-year contract expired on Sept. 30. A resolution has yet to be reached with port management, creating immediate supply-chain disruptions along the Eastern Seaboard from Maine to Texas.
Impact on Supply Chain and Airfreight Sector
Freight forwarder Scan Global Logistics (SGL) has advised customers to continue using ocean bookings but to consider alternative routes, such as shipping through the West Coast followed by overland transport. SGL also recommended customers explore airfreight and sea-air combinations for critical shipments. As port congestion worsens, several carriers have begun imposing strike-related surcharges.
Flexport, another forwarder, warned that each day of the strike could lead to five to 10 days of cargo buildup. Should the strike last more than a week, severe capacity shortages and prolonged backlogs are expected, prompting businesses to shift toward airfreight. This move is likely to lead to a surge in airfreight rates during an already strained peak season.
Judah Levine, Head of Research at Freightos, indicated that shippers are already transitioning from ocean to air cargo, particularly for perishable goods. Although airfreight prices from Latin America and Europe to North America have yet to spike significantly, China-North America rates saw a 9% increase last week, signaling the start of peak season pressures.
The latest TAC Index data shows that global airfreight rates have increased modestly, with the Baltic Air Freight Index up by 2.3% at the end of September. Airlines ETF U.S. Global Jets ETF (JETS - Free Report) , with global exposure, may get a boost from this scenario. The exchange-traded fund (ETF) JETS rose 8.1% in the past month. Themes Airlines ETF (AIRL - Free Report) , which also has global exposure, should be followed closely.
Concerns for Key Industries Due to Port Strike
Container xChange predicts that the strikes will severely disrupt industries such as retail, automotive, and manufacturing, with ripple effects hitting supply chains for months to come. Retailers, in particular, are rushing to secure shipments ahead of the holiday season, while automotive manufacturers reliant on timely parts deliveries face production delays.
Small traders are especially vulnerable, as price surges and delays could leave them stranded with unavailable containers. Many companies are rerouting shipments in anticipation of the strike’s fallout.
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Will Airlines ETFs Gain as Strikes Disrupt US East and Gulf Coast Ports?
On Oct. 1, 2024, dockworkers at U.S. ports along the East Coast and Gulf Coast launched their first major strike in almost 50 years, following the collapse of contract renewal talks. Around 50,000 port workers, represented by the International Longshoremen's Association (ILA), initiated the work stoppage after their six-year contract expired on Sept. 30. A resolution has yet to be reached with port management, creating immediate supply-chain disruptions along the Eastern Seaboard from Maine to Texas.
Impact on Supply Chain and Airfreight Sector
Freight forwarder Scan Global Logistics (SGL) has advised customers to continue using ocean bookings but to consider alternative routes, such as shipping through the West Coast followed by overland transport. SGL also recommended customers explore airfreight and sea-air combinations for critical shipments. As port congestion worsens, several carriers have begun imposing strike-related surcharges.
Flexport, another forwarder, warned that each day of the strike could lead to five to 10 days of cargo buildup. Should the strike last more than a week, severe capacity shortages and prolonged backlogs are expected, prompting businesses to shift toward airfreight. This move is likely to lead to a surge in airfreight rates during an already strained peak season.
Judah Levine, Head of Research at Freightos, indicated that shippers are already transitioning from ocean to air cargo, particularly for perishable goods. Although airfreight prices from Latin America and Europe to North America have yet to spike significantly, China-North America rates saw a 9% increase last week, signaling the start of peak season pressures.
The latest TAC Index data shows that global airfreight rates have increased modestly, with the Baltic Air Freight Index up by 2.3% at the end of September. Airlines ETF U.S. Global Jets ETF (JETS - Free Report) , with global exposure, may get a boost from this scenario. The exchange-traded fund (ETF) JETS rose 8.1% in the past month. Themes Airlines ETF (AIRL - Free Report) , which also has global exposure, should be followed closely.
Concerns for Key Industries Due to Port Strike
Container xChange predicts that the strikes will severely disrupt industries such as retail, automotive, and manufacturing, with ripple effects hitting supply chains for months to come. Retailers, in particular, are rushing to secure shipments ahead of the holiday season, while automotive manufacturers reliant on timely parts deliveries face production delays.
Small traders are especially vulnerable, as price surges and delays could leave them stranded with unavailable containers. Many companies are rerouting shipments in anticipation of the strike’s fallout.