Xeneta (ILA) union Issues misleading claim of ocean shipping Maritime Tickers

Xeneta : (ILA) union Issues misleading claim of ocean shipping

The International Longshoremen’s Association (ILA) has  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 , while at the same time claiming ocean container carriers are now charging USD 30 000 per container in a ‘whopping increase from USD 6 000 just a few weeks ago’.

ILA claim is misleading.

Xeneta data – which is based on more than 450 million crowdsourced datapoints – shows the ILA claim is misleading. Average spot rates on the major fronthaul from the Far East to US East Coast stand at around USD 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 USD 2 800 per FEU.

Muddying the waters

Peter Sand, Xeneta Chief Analyst, said “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.”

Further context

To provide further context to the ILA’s claim of USD 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 USD 8 790 per FEU.

Rumor and false information

The all-time record on the trade from the Far East to US East Coast was also set during the Covid-19 era when it reached USD 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.

Vicious circle

“If a shipper does not have access to data to benchmark their own freight rates, they may believe the ILA’s claim of USD 30 000 per container and the market enters a vicious circle of higher and higher rates being paid.

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Government intervention

“It cannot be ruled out that one desperate shipper has paid USD 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.

Latest statement

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.”

USMX

On the other hand that USMX said. “Our offer would increase wages by nearly 50%, triple employer contributions to employee retirement plans, strengthen our health care options, and retain the current language around automation and semi-automation,”

The strike will affect operations at 36 ports. According to JP Morgan, the economic impact of the strike on the US economy could range from US$300m to US$5b per day.

Several US ports have issued updates on work stoppage operational plans. Port of New York and New Jersey, and Port Houston confirmed in separate statements that all container terminals will be closed until further notice beginning on Tuesday, Oct. 1

There will be no loading or discharge of containers to/from any vessels, trains and trucks. There will be no discharge of autos and rolling stock from Ro-Ro vessels,” the Port of New York New Jersey said.

Port Houston noted that rail operations at its terminals will be suspended for the duration of the work stoppage. However, ILA-supported public general cargo/multi-purpose facilities are not expected to be impacted by the work stoppage.

JAXPORT said that the strike will primarily impact one-third of its operations, particularly affecting international container volumes managed by SSA Jacksonville and vehicle shipments. However, the remaining two-thirds of JAXPORT’s activities, which include most cargo for Puerto Rico, will proceed without disruption.

JAXPORT’s direct employees, numbering 172, are not members of the ILA, so they will continue to work as usual.

The Port of Virginia has announced that several key operations will be suspended until a resolution is reached on a new contract.

The affected facilities include Norfolk International Terminals, Virginia International Gateway, Newport News Marine Terminal, Pinners Point Container Yard, Portsmouth Chassis Yard, the Reefer Service Area, and the Damage Annex.

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