This week:
- Spot rates at US East and West Coasts reaching rare parity as ILA strike surcharges dropped
- Months of frontloading and an early peak season lead to plummeting Asia-to-US rates
- Trucking contract rates see slight increase, industry stakeholders optimistic
- Port of Savannah estimates three-week backlog after strike and Hurricane Helene disruptions
- India-US East Coast rates fall as carriers work to increase bookings
Spot Rates at US East and West Coasts Nearing Post-Strike Parity
Following the brief longshoremen’s strike at the beginning of the month, ocean carriers have quickly dropped strike-related surcharges. This only adds downward pressure to freight spot rates, which were already falling in the weeks leading up to the three-day work stoppage at US East and Gulf Coast ports.
As one forwarder told the Journal of Commerce (JoC) on October 11, “The strike fees are dead,” This has led to an unusual parity between US East and West Coast rates, as the East Coast typically demands a premium of around $1,000 per FEU.
Carriers began lowering surcharges almost immediately after International Longshoremen’s Association (ILA) officials announced the strike-ending tentative deal on October 3. Some of the fees were quite large. For instance, Ocean Network Express (ONE) implemented a “congestion” surcharge of up to $2,000 per FEU as the strike began. But all major carriers canceled their strike-related upcharges starting Friday, October 4, and continuing over the last week.
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Heavy Frontloading, Early Peak Season Lead to Tumbling Asia-US Rates
Asia-to-US freight rates are declining faster than usual due to months of frontloading holiday imports and weaker-than-expected import demand.
For at least the past few months, retailers rushed to import goods before the October ILA strike. Following an early peak season in August, demand for shipments has plummeted. These two primary factors have led to a sharp drop in freight rates, particularly for the US East Coast.
According to Platts data reported in the JoC, the East Coast spot rate was $4,300 per FEU on October 7, the lowest it’s been all year. The West Coast spot rate was $4,200, another example of the unusual post-strike parity between East and West Coast rates.
Trucking Contract Rates Up Slightly, Raising Hopes for End to Freight Recession
New trucking contract rates rose 1% compared to what they replaced as of September 22. In a weekly market update, DAT Freight and Analytics’ Group Product Manager Chad Kennedy pointed to the slight increase as a sign that a two-year freight recession may end soon.
Other analysts and industry executives have also noted positive trends in recent months. For example, Werner Enterprises CEO Derek Leathers said at Morgan Stanley’s 12th Annual Laguna Conference in September, “It is our belief that rates will need to go up as we go through the 2025 bid season. The question will be how much, and that’s really going to be dictated in a large degree by what continues to take place with capacity attrition and the overall economy.”
Port of Savannah Faces Three-Week Backlog After Strike and Hurricane
Georgia’s Port of Savannah is expected to take three weeks to recover from a ten-ship backlog following the ILA strike and Hurricane Helene. In the wake of these disruptions, vessel anchorage times increased to an average of 2.5 days, significantly longer than Savannah’s usual wait times of less than a day.
To help minimize delays, the Georgia Ports Authority (GPA) is utilizing eight berths and working on faster container handling procedures. The strike and Helene halted operations at Savannah for almost six days. As the GPA attempts to recover, it must also deal with the impact of Hurricane Milton, which made landfall in Florida. While Milton’s impact on Savannah’s dock operations is not yet known, the storm did disrupt vessel traffic in the Panama Canal, affecting ships bound for the port.
Savannah has extended fate hours and is collaborating with rail carriers CSA Transportation and Norfolks Southern Railway to further support cargo owners.
Container Lines Adjust India-US East Coast Rates as Bookings Drop
Container lines operating on the India-US East Coast trade route continue to implement new pricing strategies, lowering rates to match capacity as bookings continue to drop sharply.
Spot rates have declined approximately $1,000 per container, week over week. According to Platts, as reported in the JoC, the rates stood at $4,000 per FEU as of early last week. Forwarders have received booking quotes ranging from $3,000 to $3,200 per container for upcoming sailings on the trade lane.
According to one forwarder speaking to the JoC, Maersk was the first to significantly lower rates on the spot platform, followed by smaller players. They characterized the situation as a price war in a softening market. Other sources speaking to the magazine said carriers have shelved all plans for any October rate increases, which were expected this month after being pushed back in September.