Global Shipping Faces Strikes, Congestion, And Rate Surges

By
Mfame Editor
-
19

The shipping and logistics industry is currently navigating multiple challenges and uncertainties due to labor negotiations, seasonal demand, and rate fluctuations across various trade lanes. Below is a summary of the key points:

ILA–USMX Negotiations and Potential Strike Impact

  • Expiration of Agreement: The interim agreement between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) is set to expire on January 15th, 2025.
  • Disagreements: Talks have stalled over automation and semi-automation at East Coast and Gulf ports.
  • Strike Preparations:
    • Carriers like Maersk are urging quick pickup/return of containers.
    • Disruption surcharges of $850–$2,000/FEU have been announced.
  • Political Context: President-elect Trump supports the ILA’s anti-automation stance, which may pressure USMX to make concessions.
  • Potential Outcomes:
    • A brief strike is likely if concessions are expected.
    • A prolonged strike could result in port congestion, global delays, and increased freight rates.

Transpacific and Global Freight Rates

  • Rate Trends:
    • Transpacific container rates surged due to pre-Lunar New Year (LNY) demand.
      • West Coast: $6,000/FEU (20% higher than last year’s LNY peak).
      • East Coast: $7,000/FEU (3% higher than last year’s peak).
    • Asia–Europe rates increased moderately after November/December hikes, with pre-holiday congestion impacting pricing.
  • Post-LNY Outlook:
    • Rates are expected to ease in February/March for Asia-Europe trade, returning to $3,000–$4,000/FEU levels.
    • Transpacific rates may stay elevated due to ongoing tariff-related frontloading.

Port Congestion and Delays

  • Asia:
    • Severe congestion in Shanghai, Qingdao, Ningbo, the Philippines, and Vietnam.
    • Equipment shortages and delays of up to four days reported.
  • Europe:
    • Labor shortages and strikes affecting ports like Hamburg, Rotterdam, and ports in Spain and Italy.
  • Global Implications: Congestion in major hubs may exacerbate delays and apply further upward pressure on rates.

Air Freight Trends

  • Ex-China Air Cargo Rates:
    • Declined to $6/kg from December’s peak of $7/kg, still above the non-peak average of $2/kg.
  • Asia–Europe Air Rates:
    • Fell to $3.44/kg after peaking above $5/kg in mid-December.
  • Transatlantic Rates:
    • Dropped to $2.12/kg after peaking due to capacity shifts during the holiday season.

Market Dynamics

  • Pre-LNY Rush: Seasonal demand and weather-related disruptions are fueling short-term rate increases and congestion.
  • Automation Debate: The ILA–USMX standoff over automation reflects broader tensions within the maritime industry, with potential long-term implications for port operations.

The industry faces significant uncertainty, with looming strikes, congestion, and fluctuating rates affecting global supply chains. Businesses must remain proactive by monitoring developments, optimizing logistics, and diversifying shipping strategies to mitigate potential disruptions.

Did you subscribe to our daily Newsletter?

It’s Free Click here to Subscribe!

Source: CONTAINER NEWS