Fears of strike in US and weak demand hit ocean freight rates | trans.info

Photo: ArnoldReinhold, CC BY-SA 3.0, via Wikimedia Commons

Ocean freight rates on key global container routes have fallen again. Despite the upcoming Golden Week in China, which usually drives demand, the situation this year is slightly different, and the expected rate increase may not happen.

Artur Lysionok

18.09.2024

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Photo: ArnoldReinhold, CC BY-SA 3.0, via Wikimedia Commons

Demand for container transport remains weak, and growing concerns about a potential strike on the east coast of the United States and the Gulf of Mexico are further driving prices down, according to The Loadstar. The anticipated rate increase ahead of China’s Golden Week will likely not materialize.

October 1 marks the start of National Day in China, a seven-day holiday known as Golden Week. It is the longest public holiday after Chinese New Year. During this period, factories across the country close, and transport volumes drop significantly. Typically, two weeks before the holiday, consumption surges, increasing freight demand. Large volumes of goods accumulate in ports, leading to substantial price hikes for cargo transport.

However, this year, the situation is different. The industry is grappling with concerns over a potential longshoremen’s strike in the United States. Negotiations between the International Longshoremen’s Association (ILA), which represents around 45,000 workers, and port operators over wages and port automation have stalled, heightening the risk of strikes and reducing demand.

According to Drewry’s World Container Index (WCI), rates on the Shanghai-New York route fell by 21% last week, dropping to $6,661 per 40-foot container (FEU). To avoid disruptions caused by the planned strike, operators are shifting cargo from the eastern U.S. coast to the western coast.

Judah Levine, principal analyst at Freightos, notes that carriers are offering discounts to fill their ships, which could lead to further rate declines on the east coast. Meanwhile, moving cargo to the west coast could temporarily drive up rates there.

Asia-to-Europe and Mediterranean routes also saw double-digit rate drops. Rates from Shanghai to Rotterdam fell by 17%, to $5,152 per FEU, and from Shanghai to Genoa by 10%, to $5,256. Spot rates from Rotterdam to New York decreased by 9%, to $2,011.

Despite these recent declines, ocean freight rates remain significantly higher than a year ago. Rates on the Shanghai-Rotterdam and Shanghai-Genoa routes are up by 297% and 210%, respectively, compared to last year. Rates on the Shanghai-Los Angeles route have risen by 160%, and on the Shanghai-New York route by 120%, year-on-year.

Photo: ArnoldReinhold, CC BY-SA 3.0, via Wikimedia Commons