Port strikes bother Meriaura Group

Translation: Original comment published in Finnish on 3/12/2024 at 6:37 am EET

The effects of the strikes in port operations do not concern all of Meriaura's cargo and the company seeks replacement business. Assessing the impacts of the strikes in euros is challenging and we have already considered the situation to some extent in our Q1 forecasts, as the outlook for industrial disputes was difficult already at the time of the Q4 release. Strikes continuing in Q2 to a significant extent would already likely cause negative changes to the EBIT forecasts for 2024.

Port strikes will hamper Meriaura Group’s business in Q1

Trade unions announced on Wednesday, March 6th that freight traffic in Finnish ports will stop for two weeks starting on Monday, March 11th. We believe the strike will harm Meriaura Group’s business. Meriaura Group already mentioned the impact of the strikes in its verbal quarterly guidance issued on March 1st 2024. However, at that time, there was no confirmed information on the strike at ports that began on March 11th, even though continued industrial action was likely in the big picture. Due to the strikes, Q1’s earnings forecasts are subject to more uncertainty than usual, even though we have already estimated that the EBIT of Marine Logistics will decrease to 0.9 MEUR (Q1'23: 1.2 MEUR). A significant continuation of the strikes in Q2 would probably result in further forecast cuts.

Strikes do not stop all sea freight

In principle, strikes at ports have a significant impact on the sea freight business, as loading and unloading operations are suspended. However, the strikes do not apply to transport covered by security of supply, such as food, agricultural products and fertilizers (27% of Meriaura's cargo volumes in 2021). A significant part of Meriaura’s business also takes place outside Finland, and the company probably aims to compensate for the lost business by offering its capacity for spot cargo, e.g., between other Baltic Sea countries. This is not, however, enough to fully cover the halting of Finnish freight operations, especially as other freight companies will try to do the same. Strikes will probably have a significant impact on the project cargo business that is sensitive to disruptions (about 30% of revenue), which also requires special expertise from port workers.