Check out the latest ocean market insights and trends for September to help guide your supply chain strategies. Here's what we're seeing in the market right now:
Golden Week Approaches (Weeks 38-41)
Most of the focus is typically on sailings originating from China. Be sure to book early to avoid cancellations or changes to scheduled sailings.
Asia to Europe: Rates Continue to Soften
Although rates are still higher than a year ago, they have been steadily declining week by week. Capacity is available, but ongoing disruptions in the Red Sea are extending transit times around Africa by two weeks or more.
Asia to U.S. West Coast (USWC): Rates Continue to Decline
As we mentioned in our last update, rates are gradually decreasing due to shipping lines adding more capacity by increasing the number of available ships. While rates remain higher than earlier this year, they are improving for shippers despite the peak season.
Opportunity: More space is available due to additional ships. This offers an opportunity to secure better rates and possibly improved services. This could be a good time to quote a portion of your volume or initiate an early Request for Proposal (RFP).
West Coast Ports: Potential Congestion in the Coming Months
Import volumes remain high, and some shippers are diverting away from East Coast ports, adding to the demand on intermodal rail. If labor contract issues affect the U.S. East Coast (USEC) and Gulf ports, West Coast intermodal and Over-the-Road (OTR) services could quickly become overwhelmed by the additional volume.
U.S. East Coast and Gulf Ports: Operations and Contract Risks
The situation on the U.S. East Coast has improved, with more shipping space available. While rates have dropped from earlier highs, the decrease has been slower than on the West Coast.
However, this improvement comes with uncertainty. Contract negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) seem to be stalled, raising the risk of disruptions to ocean container transportation. A strike could significantly impact container and less-than-container load (LCL) imports across all U.S. coasts.
Likely impacts of extended labor contract negotiations:
- Disruption of port operations, leading to lengthy delays in container movements
- Prolonged congestion and delays at West Coast ports
- Increased challenges in critical supply chains
- Potential negative impact on the national economy through 2025, based on past labor disputes
U.S. EC & Gulf Ports ILA/USMX Contract Update and Options
A shutdown seems unlikely in our opinion, especially with the upcoming presidential election. The Democratic Party, which controls the White House, may use the Taft-Hartley Act to force both sides back to work if needed. Historically, the administration has applied more pressure on ocean carriers, many of which are non-U.S. companies.
Below is our matrix for four possible scenarios:
| Option | Outcome | Expectation |
|---|---|---|
| A | Settle contract on time | Not likely |
| B | Talks extend past deadline | Highly likely |
| C | Labor actions at ports | Highly likely |
| D | Shutdown (strike) | Unlikely |
Options for Importers and Exporters:
With demand outpacing available capacity, options for rerouting shipments will become limited. Containers that are already in transit may face extended delays, while those yet to sail will have fewer alternatives for diversion. Carrier space to the West Coast will become extremely tight and expensive, adding to congestion at those ports.
It’s highly likely that labor negotiations will extend well beyond the current contract end date of September 30. As talks continue without a resolution, labor may slow down port operations, worsening congestion. That said, it’s unlikely that there will be a complete shutdown, as indicated in our matrix.
What You Can Do Now:
- Review your cargo movement options and meet with key logistics providers to explore available solutions.
- Consider post-arrival diversions, such as shifting modes of transport to intermodal or Over the Road (OTR) trucks.
- Cross-docking and extended free time requests may offer additional flexibility.
- Stay updated on your strategies and maintain regular communication with your logistics partners to ensure you’re prepared for potential disruptions. A strong partner will be ready for these discussions!
By keeping these insights in mind, you can better navigate the evolving landscape of shipping and make informed decisions for your supply chain.
