Ocean spot rates from Asia to North Europe and the Mediterranean have seen a further decrease last week, now positioned more than 20% below the highs of July, indicating a potential early end to the peak season. The anticipation of extended transit times due to Red Sea diversions and delays at Asian ports prompted shippers to place orders earlier, with import volumes from Asia peaking around June and early July. As the deadline for European importers to ship goods in time for the holiday season approached in late September, the decline in rates accelerated, suggesting potential for further drops as demand wanes.
On the Transpacific route, an early start to the peak season was observed as well, with volumes reaching near monthly record highs in August and only a slight decline expected in September before a more noticeable decrease in October. Rates from Asia to the East Coast of the United States have been relatively stable due to the early shipping in anticipation of a potential strike by the International Longshoremen's Association (ILA) on October 1. With the strike deadline nearing, carriers are reportedly offering discounts, leading to expectations of a significant drop in East Coast rates.
West Coast rates may see some support as volumes shift from the East and Gulf Coasts. The ILA and port operators remain divided over wages and automation, making a strike increasingly likely. A strike could result in stranded imports and exports, capacity tie-ups, and backlogs, potentially leading to rate spikes and congestion at alternative ports. Maersk estimates a one-week shutdown could take four to six weeks for recovery, with the impact worsening the longer the strike lasts.
ILA President Harold Daggett has suggested that West Coast port workers might not process vessels diverted from the East Coast, which could further disrupt supply chains. The White House could intervene with a cooling-off period if the strike is deemed a threat to national health or safety, though the ILA opposes such intervention.
Additionally, a super typhoon in northern Vietnam and heavy rains in southern China have caused delays in ocean logistics, affecting container terminals in Hong Kong. Air Canada is also preparing for potential disruptions from a pilot strike, with air cargo volumes experiencing congestion in Asia ahead of the Q4 demand increase. Freightos Air Index rates from China to North America and Europe remain high, indicative of peak season levels.
Source: Container News