Transpacific container rates went up again when the Shanghai Containerized Freight Index (SCFI) closed on 14 July, as congestion built up in the US West Coast due to dockers’ strike on the Canadian west coast. Liner operators also blanked sailings in response to bleak demand.
The index showed Asia-US West Coast rates and Asia-US East Coast rates at US$1,771/FEU and US$2,662/FEU respectively, up 26% and 12% from 7 July.
Linerlytica, in a note released on 17 July, said, “Momentum is strong for another transpacific rate hike on 1 August, aided by capacity cuts and peak season demand, with disruptions from the two-week port closure on the Canadian pacific coast also helping to the keep capacity utilisation sufficiently high for the rate increases to stick.”
The 13-day dockworker strike in Canada’s Pacific coast ports ended on 13 July, after a deadlock between the British Columbia Maritime Employers Association and International Longshore and Warehouse Union (ILWU) Canada reaching a tentative agreement on a new four-year deal that will still require ratification by members of both sides.
Port operations at Vancouver and Prince Rupert restarted the following day, with the vessel back up reaching 13 container ships in Vancouver and six ships at Prince Rupert. Port congestion at the US West Coast reached a nine-month high of over 200,000 TEUs last week and the vessel backlog will take several weeks to clear, including ships diverted to Seattle and Tacoma to avoid the traffic jam. However, the resolution of the ILWU contracts in the United States and Canada will pave the way for the full restoration of normal port operations in the West Coast.
Of concern, however, is that as the dockers resume work, the easing congestion could add to the supply-side pressure on the market. Last week, ZIM predicted a full-year loss, while liner operators have accepted that there will be no peak season this quarter.
Martina Li
Asia Correspondent
