The International Longshoremen’s Association (ILA) kicked off USEC Strike action today, affecting US ports from Maine to Texas.
The union accuses ocean container carriers of extortionate price hikes, claiming rates have surged to a staggering US$30,000 per container, an alleged jump from just US$6,000 a few weeks ago.
In a statement released on Monday, the ILA voiced frustration over what they see as customer ‘gouging.’ However, this claim doesn’t seem to hold water. Data from Xeneta, which gathers over 450 million crowdsourced data points, disputes the union’s figures. According to their research, average spot rates for shipments from the Far East to the US East Coast stood at approximately US$7,000 per 40ft container (FEU) on 1 October. Similarly, while rates from North Europe to the US East Coast have seen a 50% increase since late August, the current average is still only US$2,800 per FEU.
Peter Sand, Xeneta’s Chief Analyst, wasn’t pulling any punches when he called out the union for spreading misleading information. “The union represents its members and has legitimate grievances, but misleading the public with incorrect figures does no one any favours. More than 40% of US containerised goods enter through the East and Gulf Coasts, and this strike will wreak havoc on supply chains and seriously impact the economy. Now is the time for cool heads and diplomacy, not fearmongering and fake news,” Sand stated.
To put the ILA’s US$30,000 figure in perspective, the highest recorded spot rate for a container on the North Europe to US East Coast route was US$8,790, set during the COVID-19 chaos in May 2022. On the Far East to US East Coast route, the record rate hit US$12,400 per FEU in January 2022.
Sand continued, “This type of claim needs to be addressed. In the past, we’ve seen how rumours and misinformation can fuel market panic, leading to freight rate spikes as shippers scramble to secure their supply chains. If companies lack the data to benchmark their rates, they might fall for this US$30,000 claim and inadvertently contribute to inflated market prices.”
While Sand admitted that in rare instances, one desperate shipper might have paid a shocking US$30,000, he stressed that this figure is an anomaly, not a reflection of the current market reality.
Sand also predicted that Government intervention would likely be necessary to resolve the dispute. “With the ILA’s latest statements, it seems increasingly unlikely that both sides will reach a mutually beneficial agreement anytime soon. The idea that US trade could be blocked for an extended period is unimaginable, so Government action will probably be required to protect both the economy and its people.”
The longer the strike continues and the more sluggish the Government’s response, the deeper the damage will be to the economy, with ocean supply chains taking even longer to bounce back.
