Containership backlogs have now developed due to the strike in Canadian ports, according to the latest report by Freightos, noting that more than 10 vessels are already anchored near Vancouver and several others off Prince Rupert port.
The digital marketplace for international air and ocean shipping said although ILWU and ILA members in the US have pledged not to handle diverted containers to the West or East Coast, there are already reports of diversions and rotation changes — some already handled — to US West Coast ports.
"After four days without meetings, ILWU Canada talks with the BCMEA resumed Saturday as the port worker strike entered its second week," Freightos said on July 11, adding that federal mediators are now also involved in negotiations.
It added that this diversion of volumes may have been one factor in transpacific ocean rate increases last week, as prices to the West Coast climbed 11% to US$1,319/FEU and 8% to the East Coast.
"These rate climbs could also reflect some uptick in demand and the hoped-for start of peak season," Freightos said.
Minimal impact on US shippers
In addition to anticipating minimal impact from the strike in Canada for US shippers and expressing concern over the looming UPS Teamsters strike, Freightos noted that the latest National Retail Federation report on US ocean import volumes estimates June volumes declined from May but were about on par with 2019 levels.
It also projects a 4% monthly increase in July, a 5% climb in August and still-elevated volumes through October — with monthly throughput up to 5% higher than in 2019.
"Though not everyone is convinced, these projections predict a return to pretty typical seasonality and growth relative to pre-pandemic," said Judah Levine, head of research at Freightos.
"Combined with still-elevated inventories for many retailers, these estimates also imply expectations for resilient consumer spending through the holiday season," he added.
The Freightos head of research went on to note that with volumes higher than in 2018 and 2019 in May and June, ocean rates that, for the most part, have been at or below 2019 levels may be more a function of excess capacity than of subdued demand.
"If volumes do continue to increase, carriers may still have a difficult time pushing freight rates up as new vessels are slated to enter the transpacific in August and September, adding 20-25% more capacity than last year," Levine said, adding that carriers are already trying to mitigate the supply-side increase through more blanked sailings, slower sailing speeds, and more port calls.
The Freightos report said in Asia - North Europe trade, more carriers announced significant planned rate increases for the end of the month.
But it noted that with current rates of US$1,300/FEU just below 2019 levels, only moderate signs of demand increases, and more new capacity entering this market as well, "many are sceptical that this GRI will succeed."
"IATA's latest air cargo demand data show that global volumes fell by more than 5% in May compared to last year and were 7% lower than in 2019," the report said.
It added that Freightos Air Index benchmarks for air cargo rates had China - North Europe prices at US$3.12/kg last week and China - North America rates at US$3.94/kg, both up slightly from a week before, with transatlantic prices of US$1.81/kg 5% lower compared to a week prior.
Meanwhile, based on Freightos Baltic Index (FBX) report, Asia-US West Coast prices (FBX01 Weekly) increased 11% to US$1,319/FEU. This rate is, however, 82% lower than the same time last year.
Asia-US East Coast prices (FBX03 Weekly) climbed 8% to US$2,376/FEU and are 76% lower than rates for this week last year.
For Asia-N. Europe prices (FBX11 Weekly), Freightos said these were unchanged at US$1,300/FEU and are 88% lower than rates for this week last year.
Meanwhile, Asia-Mediterranean prices (FBX13 Weekly) fell 2% to US$2,149/FEU, also 83% lower than rates for this week in 2022.