Rate Related Update and Market Conditions
Market Overview
- Strike Update: The strike at East and Gulf Coast ports that began on October 1st, 2024, has officially ended as of Thursday, October 3rd.
- Shift in Bookings: Large bookings were proactively diverted to the U.S. West Coast in response to the strike.For the upcoming weeks:
- For the first week of October, space on vessels to the U.S. West Coast was fully allocated.
- For the second week, new bookings faced a high risk of rollover.
- By the third week, the risk of rollover decreased, and fresh bookings were being accepted.
Rate Predictions
Carriers had announced a general rate increase until November 1, but the strike ended earlier than anticipated, weakening shipping stocks as freight rates were no longer expected to surge.
Port Congestion
ILA and USMX Agree on Tentative Wage Deal, Reopening U.S. Ports
The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reached a tentative agreement on a new wage offer, ending the strike that shut down East and Gulf coast ports. The deal includes a wage increase of over 60%, with a three-month contract extension to allow further negotiations. Official announcements are expected soon, and a White House briefing is scheduled to provide more details on the resolution of the strike, which had disrupted container terminal operations.
U.S. Port Strike Highlights Ongoing Labor Dispute Over Automation
While the U.S. East and Gulf Coast dockworkers’ strike ended after three days, unresolved issues surrounding automation remain. Automation has been a key concern for unions, who argue that it threatens jobs, while employers see it as a path to efficiency. The International Longshoremen’s Association (ILA) has opposed the use of automated gate systems at several ports, citing contract violations. Similar disputes over automation have been seen in other regions, including Canada and the U.S. West Coast.
Global Shipping Stocks Drop Following Strike Suspension
Global shipping stocks, including Maersk and Hapag-Lloyd, saw significant declines after the U.S. dockworkers’ strike was suspended following a tentative deal. Stocks that had rallied in anticipation of prolonged disruptions saw sharp reversals, with declines of up to 15%. Analysts expect freight rates to normalize, as the quick resumption of operations removed the potential for sustained shipping rate hikes. The U.S. dockworkers had paused their strike while continuing to negotiate a new contract with employers.
U.S. Port Strike Ends, But Cargo Backlog Remains
The U.S. East and Gulf Coast ports have reopened following a tentative wage agreement between the International Longshoremen’s Association (ILA) and port operators, ending the strike. However, a significant cargo backlog remains, with over 50 container ships waiting to unload. Analysts estimate it will take two to three weeks to return to normal operations. Shipping stocks dropped as the strike ended earlier than expected, with no significant impact on freight rates. Retailers had prepared in advance, mitigating major disruptions to their supply chains.
