West Coast ports open after labour issues arise on Good Friday; Asia-USEC rates tick higher

HOUSTON (ICIS)–The ongoing labour negotiations between West Coast ports and dock workers likely contributed to the closure of terminals at the ports of Los Angeles and Long Beach on Good Friday, while container rates from east Asia and China to the US East Coast ticked higher, highlighting this week’s logistics update.

Kyle Beaulieu, director of global ocean procurement and head of transpacific at freight forwarder Flexport, said during a webinar on Thursday that LA/LB terminals were closed for 24 hours from 6-7 April.

Beaulieu noted there is some dispute and disagreement over why this occurred, but said operations restarted for the evening shift on 7 April and have been consistent since.

This was the first major disruption to Los Angeles and Long Beach ports since the labour negotiations started in July 2022.

Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said prolonged stops like these could cause some West Coast congestion and delays.

“But the significant shift of volumes to the East Coast since last summer in anticipation of labour disruptions could mitigate the impact of these delays or any rise in rates to the West Coast for many importers,” Levine said.

Beaulieu said a growing number of carriers have amended their detention and demurrage policies so there will no longer be charges on days when terminals are closed.

“These changes have really been prompted by the FMC (Federal Maritime Commission),” Beaulieu said.

The FMC, the independent regulator that oversees international ocean transportation, has been implementing policies after passage of the Ocean Shipping Reform Act.

CONTAINER RATES
Rates for shipping containers from east Asia and China to the US West Coast edged lower by 1%, but rates to the US East Coast rose by 4%, according to data from Freightos.

“Rates for all major trade lanes ex-Asia are likely reaching their floor, with Asia-USEC and Asia-Europe rates ticking up last week, as carriers have increased steps to reduce capacity and many transpacific and Asia-Europe ships are now reportedly sailing nearly full,” Levine said.

Levine said recent announcements of significant general rate increases (GRIs) planned for May are more likely to be signs of confidence in the capacity reductions than expectations of an imminent rebound.

“Though there are plenty of indications to the contrary, there are still signs that the industry is heading for a recovery of volumes in time for the peak season this year,” Levine said.

Most chemicals are liquids and are shipped in tankers, but plastics like polyethylene (PE) and polypropylene (PP) are shipped in containers and are having to compete with traditional imported goods.

LIQUID TANKERS
Rates for liquid chemical tankers were largely flat this week, with a decrease for volumes from the US Gulf to India.

Rates remain relatively high after rising significantly in early 2022 around the time that Russia invaded Ukraine, which led to a shift in trade flows.

RAILROADS
Railroad service remains “about the same” or “worse,” according to respondents in a recent survey of members by the American Chemistry Council (ACC).

The ACC has called on the US Surface Transportation Board (STB), the regulatory agency that oversees railroads, to increase competition in the railroad industry through practices such as reciprocal switching.

They also want the railroad companies to be held accountable for service failures and want the STB to set minimum service standards.

Most companies reported worse conditions for rail shipping compared with conditions prior to the pandemic.

Complaints included longer transit times, missed switches, increased demurrage charges, reduced service days and higher rates.

More than half of the companies, and/or their customers, saw facilities subjected to railroad service embargoes in 2022, with almost 90% saying they were subjected to more embargoes than in prior years.

TRUCKING
Broker-posted spot rates eased in all segments last week, according to data from FTR Transportation Intelligence.

FTR said the declines generally align with seasonal expectations.

Load activity declined by the most since mid-January, but Good Friday observances might have played a role.

The market lull likely will continue at least until mid-May, FTR said.

Thumbnail image shows the San Pedro Bay complex at the Port of Los Angeles. Photo courtesy of the Port of Los Angeles