"Double pressure: freight rates to rise in August? Risk of strikes at US East Coast ports intensifies, retailers accelerate stocking strategies"
Date：2024-08-09 14:45:00 View：
The International Longshoremen's Association (ILA) recently announced plans to adjust its final contract requirements within the next month and prepare for a possible strike by its port workers across the US East Coast and the Gulf Coast in early October.
According to the ILA, the organization plans to elaborate on and formally submit the revised contract requirements to the representatives at the wage committee meeting held in New Jersey on September 4-5. These requirements will be submitted directly to the employer group, the United States Maritime Union (USMX), to initiate a new round of negotiations.
Harold Daggett, ILA's president and chief negotiator, made it clear that with the current main contract about to expire in less than a month, this meeting is not only to advance negotiations, but also to ensure that the union and its members are fully prepared to deal with strike actions that may break out on October 1.
Although some large U.S. shippers expressed optimism about avoiding a strike, believing that political pressure during the election could prompt the two sides to reach a compromise, they also warned that if the negotiations break down, it would have a huge immediate impact on the U.S. economy, especially a major shock to the supply chain.
If the East Coast ports of the United States start to strike, it will bring huge challenges to the supply chain.
It is understood that U.S. retailers are placing orders overseas in advance to cope with increasing shipping disruptions, rising freight rates and looming geopolitical risks.
Due to the restricted passage of the Panama Canal due to drought, the continued Red Sea crisis, and the possible strike of workers at ports on the East Coast and Gulf of Mexico, supply chain managers see warning signs flashing around the world, which forces them to prepare in advance.
Since late spring, the number of imported containers arriving at U.S. ports has been far higher than usual. This marks the early arrival of the peak shipping season that lasts until the fall each year.
Matt Priest, CEO of the American Footwear Wholesalers and Retailers Association, said that this summer, shoe companies are competing with importers of electric vehicles and electric vehicle parts for space on container ships.
Priest said the past few years have indeed caused post-traumatic stress as retailers have dealt with a variety of issues, including large and unpredictable fluctuations in consumer demand, product shortages and surpluses, shipping delays, and freight rate fluctuations. He said that buying in advance is a natural response to these challenges.
In the field of freight rate fluctuations, North American routes have recently experienced a downward trend. According to the latest Shanghai Containerized Export Freight Index, we observe that the market freight rates (including ocean freight and ocean freight surcharges) from Shanghai Port to the base ports of the West Coast (West Coast) and East Coast (East Coast) of the United States have been adjusted.
Specifically, the freight rate from Shanghai to the West Coast of the United States fell to US$6,245/FEU, a decrease of 6.3% compared with the previous period; while the freight rate from Shanghai to the East Coast of the United States was adjusted to US$9,346/FEU, a slight decrease of 2.2% compared with the previous period.
Although the freight rates on North American routes have been adjusted back recently, according to foreign media reports, major shipping companies plan to raise freight rates from Asia to the West Coast of the United States in mid-August to curb the downward trend in freight rates. The freight rate per 40-foot container will be increased by US$1,000, effective from August 15.