As of today, labor negotiations on the US East and Gulf coasts remain in a deadlock, with the possibility of a breakdown that could lead to a strike starting as early as October 1. This development poses a significant risk for supply chain disruptions, potentially impacting cargo movement and leading to a surge in freight rates.
Recent Shipping Industry Updates
In a major shake-up, HAPAG has officially announced its exit from THE Alliance, prompting a realignment among major shipping players. ONE, YML, and HMM have formed a new group, Premier Alliance, and have entered into a partnership with MSC on the Far East-Europe route. This shift could lead to changes in shipping lanes and capacity, further affecting freight markets.
Freight Rate Trends
Efforts to increase rates, particularly on the West Coast, failed again on September 15, despite the potential boost in cargo from the East Coast amid strike concerns. The East Coast rates, which typically remain higher, have plummeted close to West Coast levels, reflecting market instability.
For shippers, the good news is that current rate levels are expected to continue dropping, at least until mid-October. However, there remains significant uncertainty, with future rate trends hinging on two major events:
- The outcome of the labor negotiations on the US East and Gulf coasts.
- The results of the US elections in November.
What Should You Do Now?
To avoid potential delays and cost hikes, businesses should consider the following steps to protect their supply chains:
- Book Early: Given the potential for a strike, it’s wise to secure space early, especially on the West Coast, which could experience congestion if a strike occurs.
- Diversify Routes: Consider alternative routes, particularly through the West Coast, or explore other shipping lines that may offer more stable services amidst these realignments.
- Monitor Rate Changes: Stay informed about freight rate trends and market updates, as the situation is evolving rapidly. Rates may fluctuate significantly depending on labor actions and political events.
Worst-Case Scenario: What to Watch For
The worst-case scenario would involve a strike on the US East and Gulf coasts, compounded by political shifts after the US elections in November. Such a situation could lead to severe overbooking and congestion on the West Coast, driving freight rates to soar.
To avoid potential disruptions, staying proactive and maintaining flexible shipping strategies will be crucial in the coming months. At Mbmlog, we are closely monitoring the situation and are prepared to help our customers navigate these challenges effectively.
Stay ahead of the curve and ensure your cargo moves smoothly, regardless of the uncertainties ahead.
