The International Longshoremen’s Association (ILA) has today (10 October) gone ahead with strike action at US ports from Maine to Texas and accused ocean container carriers of ‘gouging customers’.
The ILA confirmed the strike in an announcement yesterday, Monday, while at the same time claiming ocean container carriers are now charging US$30,000 per container in a ‘whopping increase from US$6,000 just a few weeks ago’.
Xeneta data – which is based on more than 450 million crowdsourced data points – shows the ILA claim is misleading. Average spot rates on the major fronthaul from the Far East to the US East Coast stand at around US$7,000 per FEU (40ft container) on 1 October. While average spot rates from North Europe to the US East Coast have increased 50% since the end of August, they are still only US$2,800 per FEU.
“The union is representing its members and clearly has grievances to raise, but muddying the waters with misinformation does nothing to help resolve the situation. More than 40% of containerized goods enter the US through the East and Gulf Coast so this strike will cause carnage across supply chains and damage the US economy. Now is the time for cool heads and diplomacy rather than scaremongering and fake news,” stated Peter Sand, Xeneta’s Chief Analyst.
To provide further context to the ILA’s claim of US$30,000 per FEU freight rates, the all-time record average spot rate on the trade from North Europe to the US East Coast was set during the COVID-19 period in May 2022 at US$8,790 per FEU.
The all-time record on the trade from the Far East to the US East Coast was also set during the Covid-19 era when it reached US$12,400 per FEU in January 2022.
Sand said: “This claim by the ILA must be corrected because we have seen in the past how rumor and false information causes panic in the market and spiralling freight rates as shippers rush to protect supply chains.
“If a shipper does not have access to data to benchmark their own freight rates, they may believe the ILA’s claim of US$30,000 per container and the market enters a vicious circle of higher and higher rates being paid.
“It cannot be ruled out that one desperate shipper has paid US$30,000 in a very extreme example, but this freight rate is certainly not representative of the market.”
Sand has reiterated his belief that Government intervention will be required to bring the dispute to an end.
He said: “The latest statement by the ILA suggests there is very little prospect of the two sides reaching a mutually-agreeable resolution. To stop trade from entering the US on such a scale for a prolonged period of time is unthinkable so the Government will need to step in for the good of its people and economy.
“The longer the strike action goes on and the longer it takes the US Government to intervene, the deeper the damage will be to the economy and longer it will take for ocean supply chains to recover.”
This article was written by Peter Sand, Xeneta’s Chief Analyst.
