Teamsters
Mike Wackett August 23, 2024
Trans-Pacific container spot prices were trending higher this week as labor dispute clouds gathered at U.S. East Coast ports.
Drewry's WCI Asia-US East Coast spot rate component rose 1% week-over-week to $8,811 per 40 feet, up 157% year-over-year.
But for Asian exporters looking to ship goods through U.S. East Coast ports ahead of the potential Oct. 1 strike, that “ship has already sailed” and so for the time being, spot rates for this route are somewhat theoretical.
Meanwhile, WCI prices from Asia to the US West Coast rose 2% to $6,401 per 40 feet, a 186% increase compared to the same week in 2023.
The impasse in new contract negotiations between the International Longshoremen's Association (ILA) and United States Maritime Union (USMX) employers appears to be increasing the likelihood of strikes and other labor unrest in October.
This is expected to cause spot rates along the trade route to rise sharply unless a breakthrough is made in ILA/USMX contract negotiations, putting significant pressure on capacity at Asia-US West Coast terminals.
In fact, in the East Coast port of New York alone, there are 146 ships that could be affected by labor disputes with three weeks to go, according to data from maritime and supply chain intelligence company eeSea.
Moreover, on the transatlantic trade route from Europe to the U.S. East Coast, shippers may have just a few weeks to safely ship goods and get them through customs before labor unrest puts their cargo at risk of being locked up.
Still, container spot rates from Northern Europe to the U.S. East Coast have so far shown minimal reaction to the strike risk, hovering around $2,000 per 40ft. But shippers should expect rates to rise significantly next month if contract negotiations remain unresolved.
The story is different elsewhere, particularly on Asia-Europe routes, where airlines are starting to come under pressure to meet quotas as peak season arrives earlier.
A large UK-based furniture importer told The Loadstar: “Rates are falling every week. It appears that carriers are re-examining the market and finding that shippers are not willing to pay exorbitant rates.”
WCI Asia/North Europe spot prices fell 4% week-on-week to $7,429 per 40 feet, but this is a massive 340% increase from the same week last year and there is still some way to go before prices fall.
Another UK-based importer of bulk goods said there was “definitely light at the end of the tunnel” as rates with major carriers had fallen significantly, but added that “we're still uncertain about how the US strike will affect rates.”
To summarise the current liner market from a carrier's perspective, the comments made by OOCL's parent company, Orient Overseas (International), in its first quarter interim financial report are particularly apt:
“The volatile nature of the market leads us to continue to exercise caution,” the company said.
