Union and terminal operators’ agreement on automation expected to stabilize ocean freight rates
A provisional labor contract for East and Gulf Coast ports is anticipated to bring stability to container shipping rates, although a range of ongoing issues still requires caution within the supply chain.
“The agreement between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) is a positive development, as a strike could have led to a significant supply chain and economic crisis. However, it underscores the ongoing challenges shippers face in managing supply chain risks,” stated Emily Stausboll, a shipping analyst at Xeneta, in a release.
On Wednesday, a historic agreement was announced covering 25,000 workers, which allows for the implementation of automation technology at container ports along the Eastern Seaboard and the Gulf of Mexico, while also ensuring additional ILA positions to operate this equipment.
For months, shippers and logistics providers prepared for a possible ILA strike if a new contract was not reached before the current contract’s expiration on January 15.
In anticipation, importers accelerated their shipment schedules to avoid a repeat of the three-day work stoppage by the ILA in October. Concurrently, liner operators initiated preemptive strike surcharges and urged shippers to clear their containers before potential port closures.
Container operations will continue under the existing contract terms as the ILA and USMX finalize benefits and other specifics of the new six-year agreement, which is expected to be ratified by union members by summer or fall.
“Average spot rates for trade from the Far East to the U.S. East Coast have surged 26% since December 14, reaching $6,800 per forty-foot equivalent unit (FEU),” noted Stausboll. “Carriers were ready to impose further disruption surcharges of up to $3,000 per FEU had a strike occurred.”
Looking ahead, spot rate growth on U.S. trades from the Far East is likely to soften, indicating a more favorable outlook for shippers negotiating long-term contracts.
The U.S. demonstrated a strong performance in global trade throughout 2024, outpacing other major markets.
“However, indications of a weakening global market in 2025 are evident, as average spot rates from the Far East to Northern Europe have declined since spiking in Q4 of last year,” Stausboll added.
Shippers should remain cautious, as even minor developments could trigger a resurgence in freight rates, especially considering ongoing tensions in the Red Sea and the potential implications of a Trump presidency, which could heighten the U.S.-China trade war.
