Freight rates for Panamax container ships are soaring as fewer vessels become available for new orders amid worsening bottlenecks at US West Coast ports.
Dozens of container ships are pending unloading for over a week off ports of Los Angeles, San Francisco and San Diego, according to Thomson Reuters shipping data.
A Shanghai index for U.S. West Coast (USWC) freight rates rose 23 points last week to 2,265, Reuters reported, adding that quotes had risen a further five points on Monday.
The West Coast port dispute has seen the ports closed for business for the fourth day on Monday as the Pacific Maritime Association (PMA) ordered a four-day shutdown of the West Coast port operations further delaying loading and unloading of cargo.
PMA said it did not intend to pay 50% premium over the said period while the productivity is ”severely diminished” and ”the backlog of cargo at West Coast ports grows.”
The delays have prompted major liner companies, such as Maersk and Cosco, to cancel sailings, opting for the East Coast ports of the US.
The cost of shipping from China to the East Coast has risen 25% in the past 13 months as more goods flood East Coast ports, writes the Wall Street Journal citing data from Macquarie Research.
Automakers such as Toyota and Honda have had to resort to air transport or even slow down their production.
The delays have had a huge blow on US retailers as well, who are said to be facing losses up to USD 3.8 billion, Kurt Salmon consulting firm estimates.
The dispute has also slashed container reliability performance, which, according to Drewry, fell to a record low in January as the effects of US West Coast congestion kick in.
In the wake of deepening gap between the two negotiating parties, the White House has sent the US Labor Secretary Tom Perez to California to help bring labor talks on a new contract between shipping companies and longshore workers to the right track.
Perez is due to arrive in San Francisco on Tuesday, Reuters reported.
World Maritime News Staff; Image: ILWU