The Panama Canal’s restriction on shiploads and industrial action by US west coast dockers could pause the slide in container freight rates, according to Yang Ming CEO Patrick Tu.
He said the Shanghai Containerised Freight Index had been going up in the past two weeks.
Due to drought, the Panama Canal authority brought in weight restrictions on larger vessels on 24 May and stepped them up five days later. Consequently, several liner operators have hiked freight rates by between $300 and $500 per container.
Mr Tu said THE Alliance, of which Yang Ming is part, had five US east coast services, two using the Suez Canal and three going via Panama. Customers would be advised to use the Suez route for heavy cargo, although Yang Ming would also adjust its loading limits accordingly, he added.
He explained: “The SCFI’s rise doesn’t yet signal a recovery, but it’s a good sign, and we hope this continues. People have said that liner operators should blank more sailings to stabilise freight rates, but we haven’t idled any ships. Slow-steaming has enabled us to trim capacity by 10% and, with the load reductions in the Panama Canal, another 1%-2% will be cut.”
On the action by US west coast dockers, Mr Tu believes it is merely “a delay in manpower deployment and not an all-out strike”.
He said: “This doesn’t have a severe impact. Wage negotiations for the dockers are held every six years and such industrial action always occurs during the discussions. The current situation has caused only some delays in shipping schedules, but these aren’t beyond control.”
The International Longshoremen and Warehouse Union (ILWU), representing 22,000 dockworkers, and the Pacific Maritime Association (PMA), which represents ocean carriers and terminal operators, have been discussing a new labour contract since May 2022, two months before the then current agreement expired.
Citing the record profits liner operators reaped during the pandemic-fuelled boom, the ILWU is demanding wages be increased by $7.50/hour, while action by some some dockers has disrupted operations at terminals in Seattle, Los Angeles and Oakland.
