Smooth Sailing

This comes after warnings from the International Longshoremen’s Association (ILA) leader about a possible strike if a new contract isn't negotiated soon. USMX assured that they are working towards resolving current issues to prevent economic disruption.

The current contract, expiring on September 30, 2024, covers around 14,500 port workers and was last ratified in 2018. ILA President Harold J. Daggett expressed concern over slow negotiation progress and warned of a potential strike starting October 1, 2024.

Negotiations stalled in June after ILA discovered autonomous truck processing systems bypassing ILA labor, and they have refused to meet until this issue is resolved.

USMX committed to keeping negotiations confidential but reiterated their willingness to negotiate. Daggett affirmed that ILA members are prepared to strike if demands are not met by October 1 and opposed external interference from the Biden Administration or Department of Labor.

In the first half of 2024, 264 new ships with a combined capacity of 1.6 million TEU were delivered, a record high, surpassing the previous record set last year.

The 12k-17k TEU ship segment has grown the fastest, now comprising 22% of the container fleet and contributing nearly 50% to the overall fleet’s growth. This segment will continue to dominate future growth, accounting for over 50% of the capacity on order, a shift from the previous dominance of ships larger than 17k TEU.

The fleet’s capacity is expected to exceed 30 million TEU by the end of Q3 2024 and reach 30.5 million by year-end. By the end of 2027, an additional 4.3 million TEU will be added from the current order book.

However, as cargo volume growth may not match this expansion, an increase in ship recycling is anticipated to moderate overall fleet growth. Additionally, if ships return to routes via the Red Sea and the Suez Canal, the demand for ships will decrease.

Despite a significant influx of new vessels, capacity remains tight, with the container ship fleet growing by 1.6 million TEU this year. Rates on the trans-Pacific and Asia-Europe/Mediterranean routes are high, though some signs of peaking are noted.

For example, North Asia-US West Coast rates are nearly four times higher year-over-year. Capacity is absorbed by longer routes to avoid Houthi militant attacks and port congestion in Asia.

Sea-Intelligence Maritime Analysis reports carriers plan minimal blank sailings, indicating confidence in peak season demand.

Air freight rates from China to North Europe and North America have softened slightly but remain significantly higher than last year. E-commerce imports from China continue to drive air freight demand.