Members of Canada's ILWU port worker union have been on strike since July 1, shutting down operations at the ports of Vancouver and Prince Rupert and putting pressure on port operators to come to an agreement on terms for a new contract.

In a new report, Freightos said negotiations that continued during the first days of the strike have now stalled — but major disruptions are yet to be seen.

"Though there are some reports of building backlogs, other measures show little signs of congestion just yet, as carriers may be diverting cargo to alternate ports," Freightos said on July 5.

It noted that Freightos Terminal data for Shanghai-Vancouver shows container rates have gone unchanged since the strike started.

"A prolonged shutdown and significant enough diversions could push rates up at alternate ports," the online freight marketplace added.

"And while the US's ILA port worker union has pledged not to handle diverted cargo, business groups in Canada are urging the government to issue a back-to-work order."

Rates more than 20% below 2019 levels

In the meantime, Freightos said transpacific rates decreased slightly last week and — as back in early July 2019, prices had already started to climb on a peak season increase in demand – rates are now more than 20% below 2019 levels to both coasts.

It added that Asia-North Europe prices ticked up 2% last week to about US$1,300/FEU, just below 2019 levels. Maersk announced a significant rate hike of up to US$1,900/FEU planned for the end of July on this lane.

"But with minimal volume growth on the ex-Asia lanes so far and not a lot of optimism for a big peak season surge in demand just yet, rate increases will likely only succeed if carriers manage capacity much more strictly than they did for June's unsuccessful transpacific GRI attempt," the report added.

Freightos said this task is all the more challenging given the new larger vessels now entering the market and carriers stuck with long-term chartered capacity leased in the past two years while demand was surging.

Meanwhile, it said Asia-Mediterranean rates were steady at US$2,188/FEU last week.

Freightos said prices on this lane had decreased 11% since the end of May, but this decrease is likely a function of carriers adding capacity to the region as rates to Mediterranean ports have remained quite elevated even as prices on other lanes plummeted.

It noted that even with the recent decrease in rates, prices are still 24% higher than in 2019, as demand has proved resilient.

Meanwhile, the FBX overview showed that Asia-US West Coast prices (FBX01 Weekly) dipped 1% to US$1,192/FEU. This rate is 84% lower than the same time last year.

The Asia-US East Coast prices (FBX03 Weekly) also decreased 4% to US$2,203/FEU and are 78% lower than rates for this week last year.

During the period, Asia-North Europe prices (FBX11 Weekly) increased 2% to US$1,297/FEU and are 88% lower than rates for this week last year.