European carmakers most at risk from US dockworkers strike: analysts

European carmakers are the most likely to be affected by the dockworkers strike at US east coast and Gulf coast ports because they rely heavily on the locations, but a longer walkout could prove "debilitating" to the entire sector, industry officials and analysts said.

The dockworkers began their first large-scale stoppage in nearly 50 years early on Tuesday, halting the flow of about half the nation's ocean shipping.

The International Longshoremen's Association union representing 45,000 port workers had been negotiating with the US Maritime Alliance (USMX) employer group for a new six-year contract.

A group representing major carmakers urged the White House to broker a resolution.

"A protracted strike will be debilitating to the auto supply chain and set off economic and national security ripples across the country, harming auto communities and consumers," said John Bozzella, CEO of the Alliance for Automotive Innovation.

He noted the ports affected by the strike handled 34% of all US motor vehicle and parts trade worth $135.7bn (R2.36-trillion) last year.

"If (the strike) turns into weeks, it's going to be a tragedy," said Steve Hughes, CEO of HCS International, which advises the auto sector on shipping issues.

While carmakers could survive some time without vehicle deliveries, a shortage of parts would certainly hurt, Hughes said.

"If you look at a GM car, you're going to find all sorts of European and Asian parts in those car," he said.

The Motor & Equipment Manufacturers Association, a trade group for auto suppliers, also called on US President Joe Biden to force both sides back to the bargaining table.

A shortage of parts could lead some carmakers to reduce vehicle production, though analysts said some may quietly welcome that. Stellantis, for example, has very high vehicle inventories. Stellantis said it was taking steps to mitigate the potential impact of the strike on vehicle production without providing details.

Barclays analyst Dan Levy said 70% of auto parts imports into the US come via the affected ports, though companies likely built up some inventory since the strike risk had been visible for a while. If carmakers are forced to fly in parts, that could drive up costs.

"All of this is very, very inflationary," Hughes said.

European carmakers, many of which use the ports on strike, would be the most affected, Levy said in a research note.

"The European [carmakers] lean heavily on Baltimore for imports and southeastern ports [Charleston] for exports, as most of their US production exposure is in this region," he said.

BMW and Volkswagen said they were monitoring the situation closely and working to minimise any impact, while Volvo Cars said it was devising contingency plans but had not yet experienced any noticeable impact. Officials with Mercedes could not immediately be reached to comment.

European imports have accounted for as much as half of the German carmakers' US sales in recent years and Volvo Car is even more reliant, Levy said. However, with inventories higher than usual, the companies may have prepared and the strike impact could be limited barring a long walkout, he said.

Truckmaker Volvo said the company stockpiled parts and looked into rerouting shipments to minimise impact and doesn't expect any impact in the short term.

Detroit carmakers could benefit modestly as reduced industry inventories could limit pricing pressure, Levy said. The companies, including General Motors and Ford, are more likely affected by the import of parts since most of their vehicle imports come by truck and rail from Canada and Mexico, he said.

"We are carefully monitoring the situation and have contingency plans in place," GM said.

"We will continue to work to mitigate any significant impact to our operations and will make adjustments as needed.”

The Detroit carmaker declined to provide details on how it uses the ports or the nature of its contingency plans.

Ford said it was monitoring the situation, but said it was too early to speculate on potential impacts.

Asian carmakers may be less affected, Levy said.

Toyota built up extra vehicle inventory over the past few weeks to help buy it time and it was watching the talks closely, said Toyota North America executive vice president Jack Hollis.

Mazda said the ports of Baltimore and Jacksonville, Florida, were important for the Japanese carmaker, but its vehicle inventories were sufficient to meet short-term demand. Honda said it was affected by the strike, without providing details, while Nissan said it has implemented contingency measures to mitigate delays, but declined to provide details.

Hyundai said its logistics affiliate, Hyundai Glovis, was closely monitoring the talks and working on alternate plans to ensure delivery of vehicles.