HSBC Research has published a research report stating that the potential strike at U.S. East Coast ports starting from October 1st may affect over half of the U.S. container import volume and nearly one-sixth of global container trade volume. The strike can increase shipping costs before the seasonal freight peak of the lunar New Year, which falls earlier next year than in 2024, positioning carriers favorably for next year's contract negotiations and driving up container shipping stocks.

Since the International Longshoremen's Association (ILA) withdrew from the negotiating table in June, the two parties have not engaged in any negotiations. Therefore, HSBC Research does not hold high hopes for reaching an agreement in the short term. The bank believes that a long-term strike may prompt the Biden administration to reconsider its hands-off approach. As a first step, both sides need to resume wage negotiations.

According to the estimation of HSBC Research, a one-week port strike could disrupt approximately 0.5 million TEUs of container throughput, equivalent to 1.7% of fleet capacity. The bank believes that a long-term strike will prolong the tight capacity situation until early next year, keeping shipping rates buoyant for a longer period. The bank has a "buy" rating on SITC (01308.HK) with a target price of 24.5 yuan.

Stock│Investment Rating│Target Price(HKD).

COSCO Shipping Holdings (01919.HK) │ Hold │ 11.7

Orient Overseas (00316.HK) │ Hold │ 115.0

SITC (01308.HK) │ Buy │ 24.5