PORT STRIKE THREAT HELPS BOOST TRANS-PACIFIC CONTAINER RATES
A late-year freight surge has kept ocean container rates elevated on trans-Pacific routes to the United States. Routes from Asia to the U.S. West and East coasts showed narrow increases for the week ending Dec. 20, according to shipping data analyst Freightos, and are about 15% higher than at the start of December, on midmonth general rate increases by carriers. Asia-U.S. West Coast prices increased 4% to $4,452 per forty-foot equivalent unit for the week. Asia-U.S. East Coast prices were up 2% to $5,932 per FEU. Prospects of a strike at U.S. East Coast ports in January could boost trans Atlantic rates, which have been stable since mid-October. “Some carriers have announced disruption surcharges for mid month in anticipation of an International Longshoremen’s Association strike,” wrote Levine. “Some are also expecting the February alliance reshuffle to cause some disruptions, with MSC announcing a $2,000 per FEU disruption charge starting Jan. 18 for trans-Atlantic containers.” Asia-Europe and Mediterranean container rates eased 3% to 7% from early December GRIs, “with no noticeable mid-month increases despite schedule disruptions from recent bad weather leading to some moderate congestion at some European hubs.”
ASIA-US CONTAINER RATES CLIMB IN LATEST FREIGHTOS INDEX
Ocean container rates on trans-Pacific Asia-U.S. services continued their December rise, ahead of a possible longshore strike and tariffs concerns in the new year. The Freightos Baltic Index for the week ending Dec. 17 showed Asia-U.S. West Coast rates increased 10% to $4,301 per forty-foot equivalent unit. Asia-U.S. East Coast prices gained 13% to $5,814 per FEU. “The pull-forward for the strike is likely exhausted by now as the pre-Jan. 15 arrival window has closed,” wrote Judah Levine, head of research for Freightos. “But President-elect Trump’s recent explicit backing of the International Longshoremen’s Association and its opposition to even semi-automation introductions at these ports may make a strike, or at least a prolonged one, much less likely to happen. Anticipation of tariff hikes next year is likely still driving some unseasonal volume strength, also reflected in reports of a shortage in reefer containers.” In contrast, Asia North Europe rates decreased 5% to $5,051 per FEU while Asia-Mediterranean prices fell 2% to $5,761 per FEU.
NEW LEGISLATION WOULD REQUIRE 10% OF CHINA IMPORTS TO MOVE ON US SHIPS
In a move that will roil container shipping, a new bipartisan bill would require that at least 10% of seagoing China imports move to the United States on ships built and registered in the U.S. and staffed by American crews. The requirements would begin in 2029. Individual shippers could face fines if they fail to meet the 10% threshold under the terms of the Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act introduced Thursday by Sen. Mark Kelly, D-Ariz. “We’ve always been a maritime nation, but the truth is we’ve lost ground to China, who now dominates international shipping and can build merchant and military ships much more quickly than we can,” said Kelly, a Navy veteran and the first U.S. Merchant Marine Academy graduate to serve in Congress, in a release accompanying the bill. “The SHIPS for America Act is the answer to this challenge. By supporting shipbuilding, shipping, and workforce development, it will strengthen supply chains, reduce our reliance on foreign vessels, put Americans to work in good-paying jobs, and support the Navy and Coast Guard’s shipbuilding needs.”
WAITING GAME: PORT STRIKE OR NO PORT STRIKE?
Is it game over for U.S. East Coast port employers? That was the initial feeling when President-elect Donald Trump publicly backed the International Longshoremen’s Association in its bitter fight to keep container automation technology out of Eastern Seaboard and Gulf Coast ports. Trump, who’s made a habit of ruling by social media fiat, doubled down a few days later by reposting a Facebook post by ILA Executive Vice President Dennis Daggett describing the meeting at Trump’s Mar-a-Lago residence which included his father, ILA President Harold Daggett. How long could the United States Maritime Alliance representing marine terminal operators and ocean carriers resist that kind of pressure? For perspective, it only took Trump’s threats of tariffs to see how fast Mexico and Canada fell in line. While new President Claudia Scheinbaum initially threatened to levy her own tariffs on U.S. goods, that now seems unlikely as Mexico can’t afford a trade war with its largest trading partner given the weak peso.