Container spot rates continue to slide despite a huge port strike in the US that has led to a rally in container shipping equities.
Stock prices of 13-listed container ship companies have been climbing in a display of investor optimism over expectations of improved earnings and higher freight rates.
The industrial action on the US East Coast and US Gulf, the country’s largest port stoppage since 1977, spans almost 40 facilities. More than 50 boxships are docked in the US and almost 100 are en route and set to arrive this week.
A prolonged strike would be expected to keep freight rates buoyant for longer — but so far, the impact on freight markets has been minimal.
The strike launched today is expected to restrict container capacity until early 2025, lifting freight rates ahead of the seasonal cargo rush for Lunar New Year on 29 January, analyst HSBC Global Research said.
That would also positively position carriers for 2025 contract negotiations.
That sentiment helped lift container shipping equities by 10.5% in the week to 27 September, according to the Drewry Container Equity Index.
In the same week, container spot freight rates were 7% lower.
Spot rates from Asia to the US East Coast continued their slide since July to close at $8,963 per 40-foot equivalent unit (feu) on 27 September, according to the Freightos Baltic Index.
That slide could be reversed by a prolonged strike on the US East Coast affecting around half of container imports.
That would probably lead to severe port congestion in the coming weeks.
Some 54 container ships of 371,000 teu docked at ports on the US East Coast as of 29 September, according to analyst Linerlytica.
A further 90 ships of 505,000 teu were scheduled to call at the East Coast in the following week.
US dockworkers are striking at 36 ports on the US East Coast and the Gulf of Mexico, including the key ports of New York/New Jersey, Baltimore, Houston and Savannah.
The price of container futures for 2025 contracts is up by between one-fifth and one-third, according to HSBC, citing futures contracts traded on the Shanghai International Energy Exchange.
Share prices of listed container lines have risen in recent days, led by Israeli operator Zim, whose stock soared more than 6% to a 52-week high of $26.20 in the first hours of trading on the New York Stock Exchange on Monday.
AP Moller-Maersk shares were down 4.8% to DKK 10,600 ($1,598) by the close, but remain higher than earlier in the month.
The rise in equity values has been fuelled by expectations of higher freight rates.
Some carriers have already announced surcharges of $1,500 to $3,000 per feu for the US East and Gulf Coast in October.
That implies a rise of between 25% and 50% in the transpacific US East Coast spot rates, according to analysts at HSBC.
Alternative plans
One liner executive told TradeWinds that his company had plans to discharge cargo in alternative ports before reaching the East Coast.
It would also alter schedules to facilitate discharge in alternative ports.
Overall sentiment remains one of uncertainty over the impact of the strike, he said.
The European liner operator had transferred some cargoes originally bound for the US East Coast to the US West Coast.
But Pacific ports can handle only 18% of cargoes diverted from the Atlantic coast during a strike, according to HSBC.
The transfer of cargoes has not yet affected rates, the liner executive said.
Freight rates from Asia to the US West Coast plateaued at $6,186 per feu in the week to 27 September.
The strike has had a big immediate impact on the flow of goods, from cars to electronics and whisky, between the US and the UK, according to delivery specialist Parcelhero.
The hope among liner executives is that the US government might intervene to end the strike.
Xeneta analyst Peter Sand said: “If the parties cannot solve the dispute themselves, then someone needs to solve it for them, because closing the US East and Gulf coasts to trade for a prolonged period of time would be toxic for supply chains and the economy.”
