A tentative East and Gulf Coast port labor contract is expected to have a calming effect on container shipping rates, but an array of other, still-unresolved, issues warrant caution throughout the supply chain.
“The agreement between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) must be welcomed because a strike had the potential to be a supply chain and economic disaster, but it highlights the difficulties facing shippers in managing supply chain risk,” said Emily Stausboll of shipping analyst Xeneta, in a release.
Ocean carriers, terminal operators and the dockworkers union on Wednesday announced a landmark agreement covering 25,000 workers that will allow automation technology at container ports on the Eastern Seaboard and Gulf of Mexico while guaranteeing more ILA positions to help operate that equipment.
Shippers and logistics providers for months had braced for a strike by the ILA in the event a new contract wasn’t agreed to when an extension of the current contract expired Jan. 15.
Importers had brought in shipments earlier than normal in a bid to avoid a port shutdown like the one during a three-day work stoppage by the ILA in October.
At the same time, liner operators announced preemptive strike surcharges and advised shippers to clear out their containers before ports shut down.
Container handling will continue under the terms of the current contract while the ILA and USMX work out benefits and other details of the new six-year agreement. The pact likely won’t be ratified by union members until the summer or fall.
“We have seen average spot rates on the trade from the Far East to U.S. East Coast spike 26% since Dec. 14 December to stand at $6,800 per forty foot equivalent unit,” Stausboll said, “and carriers were poised to add further disruption surcharges up to $3,000 per FEU should the strike have gone ahead.
“Looking ahead, it is likely spot rate growth will now soften on trades into the U.S. from the Far East, suggesting a brighter outlook for shippers negotiating new long-term contracts.”
The United States was a consistent bellwether for global trade in 2024, outpacing other major destinations.
“Signs of a weakening underlying global market in 2025 are also seen in falling average spot rates from the Far East to North Europe, which spiked in Q4 last year,” said Stausboll.
“Shippers must still be cautious because it will not take much for freight rates to begin spiraling once again, particularly given the ongoing conflict in the Red Sea and the return of Trump to the White House, which could escalate the U.S.-China trade war.”
Find more articles by Stuart Chirls here.
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