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US East coast port strike looms as White House declines plea to step in

Sep 17, 2024 | , , , , ,

Ocean carriers and port employers are urging the International Longshoremen’s Association (ILA) to return to contract negotiations in an effort to avoid a potential strike across East and Gulf Coast ports, as the White House rejects plea by 177 trade associations to use legal powers. 

A strike at U.S. East and Gulf Coast ports appears imminent after the White House confirmed it won’t intervene legally. Following a letter from 177 trade associations urging action if negotiations with the ILA stall, the terminal employers’ group, USMX, welcomed the call for the government to help resume talks.

Trade groups warned a strike would harm the economy, especially with inflation falling. Despite USMX’s disappointment over stalled negotiations, the White House ruled out using the Taft-Hartley Act to delay the strike, encouraging both parties to negotiate.

The ILA rejected the latest wage offer from the USMX, considering it insufficient, particularly due to the unpredictable working hours of longshore work. The union is also pushing for stricter prohibitions on automation, demanding a ban on both semi-automation and full automation at marine terminals.

In addition to automation, the ILA raised concerns about the use of surveillance equipment, such as in-equipment cameras, which they claim infringes on worker privacy. They argue that this technology contributes to a hostile work environment, particularly affecting female longshore workers.

As the strike threat looms, transatlantic shipping rates are experiencing an unexpected surge, surpassing February’s peak. While many east-west container trade routes have seen declining rates, the North Europe to US East Coast trade route has bucked the trend, with a 16% increase in rates week-on-week.

There was speculation that the impending strike contributed to the rate spike, with European shippers rushing to move goods ahead of the 1st October deadline. However, much of the price rise can be attributed to peak season surcharges implemented by carriers at the beginning of September.

MSC has already announced plans to impose an Emergency Operations Surcharge from the start of October, further driving up rates. Shipping analysts suggest that even if the strike is short-lived, lasting around a week before government intervention, the ripple effects will push rates higher and create significant disruption for shippers across the Atlantic.

We have contingency plans in place to avoid the ports likely to be most affected by strikes, as well as alternative routes and entry points.

To discuss these issues and how Metro can protect your supply chain, please EMAIL Andrew Smith, Chief Commercial Officer.

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Supply chains brace for more disruption as storm season intensifies

Sep 17, 2024 | , , , , , , , , , , , , , , , , , , , , ,

From wildfires and floods to scorching heatwaves, the consequences of climate change are becoming more pronounced, and as we enter the peak shipping season, businesses are scrambling to prepare for what is predicted to be one of the most disruptive storm seasons in recent memory.

So far in 2024 supply chain disruptions caused by extreme weather are estimated to have cost companies billions of pounds, and the storm season is far from over. Hurricanes, wildfires, and floods have already stretched global supply lines thin, and the arrival of storms like Typhoon Bebinca, which threatened Shanghai this week, adds a fresh layer of concern.

Increased visibility allows managers to pinpoint disruptions and adjust supply chains accordingly, and the key to weathering these events lies in preparation. Shippers are diversifying their carrier bases and building inventory buffers to keep goods moving in the face of challenges. Strategic planning, such as maintaining safety stock for high-demand items, has become essential in managing supply chain risks.

The heightened storm season comes as companies are already reeling from the effects of wildfires in California and Australia, as well as floods that have caused widespread damage to transportation networks in Asia.

While technology and data-driven insights have made supply chains more resilient, this year’s relentless barrage of natural disasters is proving particularly difficult to navigate. While technology can help predict and respond to the impact of storms, it is only effective when paired with clear communication and regular updates on shipments.

The threat posed by Typhoon Bebinca is yet another reminder of the supply chain vulnerabilities that remain, with Shanghai closing ports, cancelling, and halting transportation links to ensure safety. With more storms likely in the coming months, companies must remain agile and vigilant, ready to adapt to further disruptions.

The need for resilience and adaptability is more pressing than ever, as companies navigate the challenges ahead. This season may prove to be one of the toughest in recent memory, but for those prepared, there are still opportunities to maintain operational continuity in the face of adversity.

Extreme weather events consistently highlight the vulnerability of supply chains and the importance of robust contingency plans and marine insurance to protect against risk.

We have been maintaining supply chain resilience in the face of unforeseen challenges for decades. To learn how we can develop and support your supply chain resilience EMAIL our Chief Commercial Officer, Andy Smith.

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Air freight peak season surge amid tightening capacity

Sep 17, 2024 | , , , , ,

As the air cargo market enters the final quarter of 2024, capacity is already under pressure, with spot rates from Asia climbing and setting the stage for a challenging few months.

In early September, global spot rates saw a significant rise, driven primarily by tightening capacity from key regions, with average spot rates from Asia-Pacific to Europe climbing week-on-week, and rates from Thailand to Europe increasing significantly, pushing prices to nearly double what they were the previous year.

On the transpacific front, rates from Asia to North America crept up gradually week-on-week, representing a 64% increase year-on-year. These sharp increases reflect the pressure that demand is placing on available space, particularly as eCommerce volumes continue to surge.

With capacity shortages expected to escalate, particularly for shipments from India and China to the US and Europe, the cost implications will be significant as demand outstrips supply, with surges in volumes already causing congestion at air hubs across Asia, including Korea, Taiwan, and Japan. This surge is affecting not only China but also other major production centres in Asia, with increasing reliance on charter services, which further exacerbates capacity issues.

Carriers are responding to these challenges by adding more connections to their networks, expanding winter schedules, introducing additional transpacific services and increasing flights to China and India.

Looking ahead, the air cargo market is expected to remain under strain into 2025. While spot rates are forecasted to continue rising into Q4, the market outlook remains unpredictable, with factors such as economic conditions and capacity constraints shaping how the peak season will unfold.

Despite the challenges, carriers remain cautiously optimistic and while they are working to expand capacity, the pressure on available space is likely to persist. Managing the balance between capacity and demand will be key to navigating the peak season ahead.

Our block space agreements (BSA) and capacity purchase agreements (CPA)  protect space and capacity on the busiest routes.

Regardless of your cargo type, size and requirements, we have extremely competitive rate and service combinations, to meet every deadline and budget.

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice on our airfreight, charter and sea/air solutions. 

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New shipping alliances for 2025

Sep 17, 2024 | , , , , , , , , , , , , ,

With the dissolution of the 2M partnership between MSC and Maersk in February 2025, new partnerships and slot-sharing agreements are emerging, positioning shipping companies in a transformed global market.

One of the key developments is the formation of the Premier Alliance, which will replace THE Alliance. This new partnership brings together Ocean Network Express (ONE), HMM, and Yang Ming, with MSC also entering into a vessel-sharing agreement (VSA) with the group.

The Premier Alliance will focus on key East-West trade lanes, including Asia-Europe, Asia-North America, and Asia-Mediterranean routes. The agreement will offer customers more direct coverage and frequent sailings, with plans for six Asia-North Europe services, including five in cooperation with MSC.

Now the world’s largest container shipping company, MSC has moved quickly to capitalise on its scale. Following its departure from the 2M alliance with Maersk, MSC will operate largely independently while maintaining slot-sharing agreements with the Premier Alliance and Zim.

MSC will manage 34 loops across five major trade routes, covering Asia-North America, Asia-Europe, the Mediterranean, and the trans-Atlantic. It will offer customers direct port-to-port services, providing over 1,900 direct port pairings through the Suez Canal (when it is accessible) and more than 1,800 via the Cape of Good Hope.

The formation of the Gemini Cooperation, a new alliance between Maersk and Hapag-Lloyd, adds another layer of competition. Unlike MSC’s direct coverage approach, Gemini Cooperation will focus on a hub-and-spoke service network. This divergence in strategy highlights how alliances are tailoring their operations to meet the specific needs of global trade.

As these alliances come into play, the shipping landscape will continue to evolve. The Premier Alliance and MSC, with their extensive network of direct services, will provide enhanced port coverage and flexibility, while Gemini Cooperation’s hub-based model may appeal to shippers seeking more consolidated routes.

Together, these developments signal a reshaping of global shipping routes, aimed at increasing efficiency and meeting the growing demands of international trade. With direct access to over 80 ports and expanded service options, the new alliances are set to redefine global logistics for the years to come.

We will keep you advised and updated on important developments within the container ocean freight market as they materialise.

If you have any questions or concerns about the Premier Alliance agreement, or would like to discuss the wider implications of the shipping alliance changes, please EMAIL our Chief Commercial Officer, Andy Smith.

Category: Supply Chain

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