The threat of labor disruptions on the East Coast is fueling a disparity in the direction of spot freight rates for shipments from China to ports on the U.S. West and East Coasts.
While the Shanghai Containerized Freight Index for the trade from Shanghai to the U.S. West Coast increased 5 percent this week to $2,490 per 40-foot-equivalent container unit, it dropped 21 percent to $3,720 for shipments to the East Coast.
Major U.S. importers have been scrambling to bring as much of their peak-season imports into East Coast ports as early as possible this year. The disparity in the SCFI index for shipments to the two coasts indicates demand for space on vessels from China to the East Coast is falling, while demand is picking up for cargo space on ships bound for West Coast ports.
Although the International Longshoremen’s Association and United States Maritime Alliance agreed to a request from the Federal Mediation and Conciliation Service to resume stalled contract negotiations during the week of Sept. 17, retail importers can’t afford to wait for a possible resolution before the ILA contract expires on Sept. 30.
At the same time, demand for vessel space from China to Europe and the Mediterranean continues to fall. The SCFI rate index for shipments between Shanghai and ports in Europe fell 40 percent this week to $1,284, while the index to the Mediterranean dropped 46 percent.
“Whilst the SCFI westbound routes (to Europe) managed to slow the rate of decline this week as some carriers attempted to implement a GRI, the eastbound routes (to the U.S.) found some unexpected stability,” said Ben Gibson, a freight derivative analysts for Clarkson in London.
“Over the past few weeks, downward pressure on NVOCC USWC rates had led us to believe that the spot market would see further losses, but for the time being this has been averted. Whether we are seeing some genuine cargo support or an element of (the threat of) port disruption surcharges beginning to be felt in spot rates is difficult to say.”