Negotiation is over! The labor and management parties of the US East Terminal have reached a preliminary agreement! US freight rates started to fall?
Sunny Worldwide LogisticsIt is a logistics company with more than 20 years of transportation experience, focusing on markets such as Europe, the United States, Canada, Australia, and Southeast Asia. It is more of a cargo owner than a cargo owner~
Recently, the International Longshoremen's Association (ILA), which represents the interests of port workers on the East Coast and Gulf Coast of the United States, and the United States Maritime Alliance (USMX), which represents employers, announced that the two parties have reached a preliminary agreement on a new six-year master contract. This progress effectively avoided the possible terminal shutdown crisis originally planned for January 15, 2025, and also brought stability to logistics transportation on the East Coast of the United States.
It is reported that the new agreement covers approximately 25,000 container handling union workers at 14 ports and maritime cargo centers from Texas to Boston. The agreement, described in a joint statement as a "win-win" by both parties, not only protects existing jobs but also establishes a framework for the implementation of new technologies that are expected to create more jobs and boost the port's of modernization. Although the specific terms of the agreement have not been disclosed, the parties have agreed to continue operating under the current contract pending formal ratification of the contract.
Previously, tens of thousands of ILA members went on strike on October 1, 2024, due to the failure of the two parties to reach an agreement on issues such as wages and the application of machinery and equipment automation technology. The strike triggered spikes in shipping prices and cargo backlogs at the 36 affected ports, having a serious impact on the U.S. supply chain. Fortunately, on October 3, 2024, the two parties reached a preliminary agreement on the wage issue and agreed to extend the main contract originally scheduled to expire on September 30, 2024 to January 15, 2025, and the port workers were subsequently suspended went on strike.
The conclusion of this preliminary agreement not only avoids logistics delays and supply chain interruptions caused by further strikes, but also saves possible additional operating costs for cargo owners. Since the strike crisis has been lifted, the surcharges previously announced by shipping companies due to the risk of strikes will no longer be charged, which is expected to gradually return the U.S. East Line freight rates to normal levels.
Shipping Weekly analyzed that with the implementation of the new agreement, the freight rate of the West-U.S. Line may be directly affected. Currently, the spot freight rates on the US West Line from Shanghai Port to Los Angeles Port and Long Beach Port remain at a high level, but as the strike crisis is lifted, these freight rates are expected to drop. Especially with the arrival of the Spring Festival consumption wave, the traditional increase in freight demand before the Spring Festival may have a certain impact on freight rates. However, the government's control over the epidemic policy has left uncertainty in market consumption, which will affect future transportation. One of the key factors in price direction.
A senior analyst at Fitch Industrial and Commercial Enterprise Department pointed out that the current global container shipping market is facing an oversupply situation. Although there may be a phenomenon of cargo volume being stimulated by changes in tariff policies in the short term, in the long run, this policy will not The container shipping market brings lasting benefits. In addition, the global container shipping market is not optimistic, especially the Red Sea crisis in the Middle East that continues to affect the balance of supply and demand.
Nonetheless, experts remain cautiously optimistic about future market trends. If the freight rates on the US East Line can steadily return to normal levels, the overall freight rates in the container shipping market will also change accordingly. However, it will take time to verify whether freight rates on the US-Western Line can stabilize and rebound and return to normal levels.
The preliminary agreement between labor and management at the East Terminal in the United States will undoubtedly have a positive impact on the logistics and transportation industry in the United States. With the formal implementation of the agreement, it is not only expected to alleviate supply chain disruptions and freight rate increases caused by previous strikes, but will also pave the way for the modernization and future growth of the port. However, for shipping companies, how to respond to future changes in freight rates is still an issue that requires continued attention.