Asia-US rates rise as port strike threat grows

9/19/2012

Spot rates on routes between Asia and the US have increased by US$221 per teu to west coast ports (almost 9%) and by $246 per teu to the east coast (+6.6%), according to the latest data from the Shanghai Containerised Freight Index.

The price hikes come as the threat grows of strike action by dock workers at some of the busiest US east and Gulf coast ports from 1 October. 
 
Negotiations resumed this week between the International Longshoremen’s Association and the United States Maritime Alliance on a new labour agreement, but according to broker ACM/GFI, most industry participants feel not just that a strike is imminent, but expect it to last weeks rather than days. 

Lars Jensen, CEO of SeaIntel Maritime Analysis, told Lloyd’s Loading List.com that a number of carriers had announced a GRI of  $500-700 per feu to the US, but added it was unclear to what degree the hikes had been driven by fear of an ILA strike. 
 
"Part of it [the GRI] has already been applied, but as we’ve seen before, it can take two weeks before we know just how much of the full amount carriers have managed to implement. If the strike starts to look more likely, this will push up rates to the west coast further," he predicted. 
 
Ben Gibson, a container freight derivatives broker at Clarkson Securities, said TSA carriers “had achieved reasonable traction with the GRI”.  
 
A rise in the inventory-to-sales ratio in the US – suggesting restocking activity – is further evidence of shippers bringing cargo in early in anticipation of a ports shutdown, said Martin Dixon, Research Manager, Freight Rate Benchmarking, at shipping consultant Drewry.
 
He expects some deterioration in load factors and freight rates on Asia-US routes through the fourth quarter as the peak season subsides, but added: “These will be tempered by winter service withdrawals and capacity corrections.”