With no talks taking place and the US government not keen to intervene, an HSBC analysis said there might be little hope for avoiding a strike on October 1.

HSBC’s Global Freight Monitor said on September 20 that a strike will likely support freight rates in Q4 and even in early 2025 ahead of the Lunar New Year cargo rush.

Pricing for a potential strike. On 17 Sep, USMX and ILA issued statements that indicated no progress on the labour negotiations. 

The Biden administration also told Reuters on 17 September that they are not considering invoking the Taft-Hartley Act – a mandatory 80-day cooling period. 

“With no talks taking place and the government not keen to intervene, we see little hope for avoiding a strike on October 1,” HSBC said.

It noted that carriers also appear to be factoring in the potential strike by introducing surcharges of US$1,000-US$1,500/TEU for shipments to the US East Coast (EC) from October.

“We think a strike in the EC ports will likely support freight rates in Q4 and even in early 2025 ahead of the Lunar New Year cargo rush,” the Global Freight Monitor added.

The report noted that in the past four weeks container shipping share prices index showed resilience (+0.7%) despite the SCFI declining 24% during this period (exhibit 9), likely anticipating further disruptions.

Meanwhile, HSBC said air freight rates remain robust on supply-demand imbalance with the Baltic Air Freight Index (BAI) gaining 0.9% week-on-week on September 16, up 15%year-on-year (y-o-y). 

“Air freight rates have defied seasonal trends to date, hitting the highest level of the year in early September, ahead of the peak holiday season in Q4,” the report said.

“We think demand will remain robust on soaring e-commerce, ongoing ocean shipping disruptions, and cargo needs for high-tech semiconductors and new tech product launches,” the Global Freight Monitor added.

Analysts at HSBC said slowing deliveries of widebody aircraft combined with a modest capacity increase would likely keep air freight rates elevated in Q4. 

Even if the Biden administration urged Congress to pass comprehensive de minimis reform legislations, the “Notice of Proposed Rulemaking” could take 60-120 days to implement. 

“If implemented quickly, the change likely presents a headwind for last-minute holiday air shipments,” the report added.

In 2023, the value share of de minimis transported by air of total US consumer imports stood at c6%.