Container shipping companies are beginning to invoke force majeure as the strike by the International Longshoremen’s Association (ILA) continues to disrupt US East and Gulf Coast ports.
CMA CGM said that it is invoking Term 10 of its Bill of Lading due to the impacts of the strike and that additional costs may apply to cargo on the water from October 1, 2024. Ocean Network Express (ONE) also declared force majeure, citing terminal closures and transport delays due to the ILA strike and Hurricane Helene, which further complicates port operations. COSCO has also declared force majeure for the affected regions under Clause 20 of their Bill of Lading and introduced a congestion surcharge starting mid-October, ranging from US$ 1,000 to $3,375 per 40’ container, depending on the origin.
Maersk said that it was monitoring the situation, advising customers to hold empty containers until the strike ends.
Meanwhile, vessels are piling up, with Lars Jensen, CEO of Vespucci Maritime, noting, “A quick count shows 54 container vessels at a standstill off the coasts, with more arriving hourly.”
“Additionally, 10 container vessels are now at anchor outside Freeport, Bahamas. I would have an assumption that these would attempt to discharge USEC cargo here in order to free the ships and allow them to continue their service rotation. This will quickly create significant congestion issues in Freeport,” Jensen said.
“Similar issues might be expected to erupt in Cartagena, Panama, Kingston and Caucedo. Looking at vessels in port plus at anchor there are 6 in Caucedo, 10 in Kingston and 19 in Cartagena. I do no presently know what the normal level of vessels at port+at anchor is in these locations, but this provides a baseline to see if the situation worsens in the coming days.”
As fears on rate price rising continue to mount, Xeneta has come forward saying that ILA’s claims on ocean container carriers charging US$ 30,000 per container in a ‘whopping increase from US$ 6,000 just a few weeks ago’ were misleading. Xeneta said that average spot rates on the major fronthaul from the Far East to US East Coast stand at around US$ 7,000 per FEU on 1 October. While average spot rates from North Europe to the US East Coast have increased 50% since the end of August, they are still only US$ 2,800 per FEU.
“To provide further context to the ILA’s claim of US$ 30,000 per FEU freight rates, the all-time record average spot rate on the trade from North Europe to the US East Coast was set during the Covid-19 period in May 2022 at US$ 8,790 per FEU,” Xeneta said.
“The all-time record on the trade from the Far East to US East Coast was also set during the Covid-19 era when it reached US$ 12,400 per FEU in January 2022.”
“It cannot be ruled out that one desperate shipper has paid US$ 30,000 in a very extreme example, but this freight rate is certainly not representative of the market,” Xeneta’s Chief Shipping Analyst, Peter Sand, said.
