Port strike will see 60 more ships at anchor this week and rates rising

As the port strike on the US east and Gulf coasts enters its third day, container supply chain analysts are beginning to calculate just how many vessels and how much capacity might find itself ensnarled in mounting congestion.

While the key factor will be the length of the port closures, Sea-Intelligence Consulting has forecast that the strike’s first week could lead to around 60 vessels at anchor off the US east and Gulf coasts awaiting berths, with around 775,000 teu of capacity tied up in the region.

And Sea-Intelligence chief executive Alan Murphy stressed that should the industrial action continue into the remaining weeks of October, that capacity would increase in a more incremental fashion.

He explained: “In the first week the capacity loss is at its highest – around 775,000 teu – due to the vessels already stuck on the US east coast, plus incoming vessels, with the subsequent three weeks showing a loss of around 443,000 teu, as only the “new” [ship] arrivals are being counted.”

But he warned that the longer the strike continued, the more the lost capacity would be felt on a global level.

“Should the strike last four weeks, causing almost 7% of the global fleet to be tied up along the US east coast, the overall impact on the supply and demand equation will be very significant,” he said.

Sea-Intelligence said it had “identified a total of 331 deepsea container vessels scheduled to make a total of 981 distinct port calls in 20 distinct US and Canada east coast ports from 1 October to 20 October”, and that they were “deployed across a total of 68 deepsea liner services into the North America east coast, of which six services serve exclusively Canadian ports, 54 serve exclusively US ports, and eight serve a mix of US and Canadian ports”.

Removing the influence of Canadian ports from the situation, Sea-Intelligence concluded there were 62 liner services directly affected by the strike, and under that scenario, a further 400,000 teu-plus of capacity every week would be tied up.

“Should the strike last for the entirety of October, then 2.22m teu of container shipping capacity will be unable to move, equal to a loss of 7.2% of the global container shipping fleet,” it noted.

And the longer the strike continued, the greater the effect on trades outside the region, it added, using capacity-freight rate pricing models developed during the pandemic.

“Throughout the pandemic and Red Sea crisis periods, we consistently proved a +90% correlation between the loss of global fleet capacity and spot rates, both for global indices and for individual trade-level spot rate indices.

“We found that for each percentage point increase in the loss of global fleet capacity, spot rates on Asia to US east coast would increase $993 per 40ft, while Asia to US west coast spot rates would increase by $805 per 40ft.

“If this relationship still holds true, then it would suggest that the first week of strike would see spot rates increase $2,000 per 40ft on Asia-US west coast and $2,500 on Asia-US east coast.

“For each subsequent week of the strike, this model suggests spot rates will increase by $1,100 per teu on Asia-US west coast and $1,400 per teu on Asia-US east coast,” it said.

However, with volumes from Asia representing around half of US east and Gulf coast volumes, this rate spike effect could spread to other trades.