A potential strike by the International Longshoremen’s Association (ILA) could take place on October 1, 2024, as negotiations between the union and the United States Maritime Alliance (USMX) have stalled. This would affect major U.S. East and Gulf Coast ports, which handle around 43% of U.S. imports. If the strike happens, it could disrupt supply chains, creating volatility in sectors dependent on imports and exports.
Industries to Watch for Options Plays:
1. Shipping & Logistics:
• Put Options: Companies like FedEx (FDX), UPS (UPS), and freight companies like Maersk could see delays, increasing costs, and decreasing efficiency.
• Call Options: Companies that may benefit from rerouted shipping, like West Coast ports or rail services like Union Pacific (UNP).
2. Retailers & Consumer Goods:
• Put Options: Retail giants like Walmart (WMT), Target (TGT), and Amazon (AMZN) may face inventory shortages, especially ahead of the holiday season.
• Call Options: Companies with more localized production or stronger supply chain management may be less impacted.
3. Automotive & Manufacturing:
• Put Options: Automakers like Ford (F) and General Motors (GM), which rely on imported parts, could see production slowdowns.
4. Commodities:
• Call Options: Disruptions at ports could lead to price hikes in commodities like oil and raw materials, making options on companies like ExxonMobil (XOM) and Chevron (CVX) interesting plays.
Given the potential ripple effects of a strike, focus on sectors that are either heavily reliant on imports or able to capitalize on the supply chain shifts. Stay updated on the negotiations, as the U.S. government could intervene to prevent a prolonged strike, which may limit the impact on some industries.
Yes I copy and pasted me and chatgpt convo YW
Dock workers strike? Get your options ready.
byu/fellawithehoodie inwallstreetbets
Posted by fellawithehoodie
12 Comments
Good breakdown and thanks for the ideas.
I think I read something about oil not being affected by the strike and a couple of exceptions. I don’t remember if oil was one of those, but I believe defense cargo (military, aid, etc) was guaranteed to move, and I think there were others, might be worth itemizing if you’re playing the delays.
Wouldn’t it take several months before any change in shipping would be seen in west coast ports? Correct me if I’m wrong but wouldn’t rerouted ships have to sail around the world in order to port in west coast ports?
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Most chinese companies are not so impacted right? I seem to recall that they do most of their imports on the west coast.
Top east cost imports are vehicles, textiles, and machinery.
Puts on German cars, Japanese cars, heavy machinery, premium clothes
Someone needs to figure out the clothes brands that serve the east coast without the west coast. That seems like a good bet
Between UPS and Fedex, which one is better managed?
What about pharma/ biotech? They seem quite volatile to supply chain issues
This is ass backwards. When there is supply chain disruption like this, logistics companies raise prices to ship goods to compensate. You want to inverse this post if you actually want to make money.
Holding 25 SHIP $11.88 put contracts with 10/18 expiration. Stuff is dirt cheap so why not.
Don’t forget the collapse of I-40 affecting east west freight and cargo shipping just got a bit more important.
I think you’re missing the analysis on SSLs. They’re getting theirs.
They’re implementing surcharges after the fact on all containers delayed at USEC ports.
I don’t think it’s that big of a deal for MSC, Maersk, Hapag or any SSL except for the perception of traders.
Who it’s really going to hurt is large importers like Walmart, Ikea, Samsung and similar companies.
DD: This dude’s convo with chatgpt
All in ZIM calls.