U.S. port strike pushes up freight rates with ships held up offshore
A U.S. West Coast port strike is pushing up shipping freight rates as delays in offloading and taking on new cargo mean container ships are unavailable for new orders.
Dozens of container ships are lying in wait off the large U.S. West Coast ports of Los Angeles, San Francisco and San Diego. Many of them have been waiting more than a week to enter port to unload or take on new cargoes, according to Thomson Reuters shipping data.
"The strike is affecting a lot of vessels. There's a lot of delays and this is pushing up panamax (container) rates as fewer ships are available for new orders," a leading Singapore-based broker said.
The Shanghai Containerized Freight Index for U.S. West Coast (USWC) rates rose 23 points last week to 2,265 and brokers said quotes had risen a further five points on Monday.
USWC, together with European port rates, have the heaviest weighting in the overall Shanghai index, with a weighting of 20 percent each.
Ports along the West Coast are near gridlock due to the months-long dispute between dockworkers and a group representing shippers and terminal operators.
Japanese carmaker Honda Motor Co Ltd (7267.T) plans to slow production at some of its plants in North America due to a parts shortage caused by the partial shutdown of ports along the West Coast.
Fuji Heavy Industries Ltd (7270.T), the maker of Subaru cars, said it would continue flying car parts to its U.S. factory beyond an initial arrangement through the end of February.
With cargo delays rippling through the U.S. economy, President Barack Obama dispatched Labor Secretary Tom Perez to California on Saturday to help broker an agreement between the shipping companies and dock workers.
Shippers said that other ports, in particular those on the U.S. East coast, were trying to take advantage of the strike to gain market share.
"U.S. East coast ports are offering discounts to snatch market share from their West Coast competitors," one shipper said.