Flame retardant fabric_Flame retardant fabric_Cotton flame retardant fabric_Flame retardant fabric information platform Flame-retardant Fabric News The strike crisis at the West Coast Terminal is escalating, and ocean freight rates may “skyrocket” in 2022!

The strike crisis at the West Coast Terminal is escalating, and ocean freight rates may “skyrocket” in 2022!



A few days ago, J Mintzmyer, founder and chief analyst of Value Investor`s Edge (a well-known shipping analyst), warned in the latest exclusive interview: The strike crisis at the …

A few days ago, J Mintzmyer, founder and chief analyst of Value Investor`s Edge (a well-known shipping analyst), warned in the latest exclusive interview: The strike crisis at the West US terminal is at risk of escalating. If not handled well, ocean freight rates may drop in 2022. “blow through the roof” (blow through the roof).

Zero Hedge reported on February 7 that Mintzmyer said in an exclusive interview with Fringe Finance that the big problem facing the supply chain this year is that the International Warehousing and Longshore Workers Union (ILWU), which represents dockworkers in the West, is about to renew the contract that expires at the end of June. The contract was extended for three years in mid-2019, when industry market conditions were far weaker than they are now. Now that labor has huge bargaining power, it may be able to negotiate for more favorable terms.

Looking back at the last round of negotiations, it was still in 2014-15. However, it did not go smoothly and the terminal operations were disrupted. According to Flexpot data, backlogs in the first quarter of 2015 were similar to levels at the start of 2021.

The International Warehouse and Longshoremen’s Union (ILWU) in November 2021 rejected a proposal from its employer, the Pacific Maritime Association (PMA), to extend its labor contract by one year, which may set the stage for intense negotiations between the two sides this year and also give ports operations have brought chaos, and current congestion at the ports of Los Angeles and Long Beach will make similar port disruptions in 2022 take longer to recover.

Mintzmyer warned that if there is no consensus between labor and management, resulting in workers going on strike or port closures, congestion could worsen, sending shipping rates through the roof.

If this is the case, will the share prices of shipping stocks such as ZIM (ZIM) rise by more than $200? Mintzmyer said it is really difficult to predict. Labor negotiations are never easy, but the industry may privately finalize a “sweetheart deal” with the union (an agreement that is good for management and unions but not good for employees), or provide preferential treatment. extension clause until the situation returns to normal.

Mintzmyer said that while the U.S. Infrastructure Bill does allocate a lot of funding for port construction, these mega-construction bills will take years to implement. He believes that the benefits will not be realized until 2023 to 2024.

Mintzmyer pointed out that the global response to the new coronavirus (COVID-19) policy is an important factor leading to supply chain chaos. He said that the industry market situation was already quite tight at the end of 2019, and U.S. ports (especially the West Coast) had been facing a dilemma of underinvestment for 10 years. Large-scale blockades disrupted the overall operation of the ports.

Mintzmyer said that while the easing of restrictions is working, supply chains are largely disrupted and it will take several more months to ease even the most optimistic scenario.

It will take at least 8 months to resolve the shipping schedule reliability issue

Maritime data and consulting firm Sea intelligence said once carrier schedule reliability begins to recover, it will take up to nine months to return to normal levels. But there are no signs that things will improve.

It will take eight to nine months for container liners to regain schedule reliability amid the COVID-19 pandemic and supply chain disruption, according to an assessment by maritime data and consulting firm Sea Intelligence. The agency cited the emergence of major bottlenecks on the U.S. West Coast in 2015 as a comparable reference for assessing the industry’s prospects.

“Since the 2015 issues (labor negotiations at US-Western ports) were resolved within 6-7 months, this represents an average reduction in delays of 1.25-1.46 days per month,” Sea intelligence said. “If the current port and hinterland systems can be restored at the same pace, this means the current delays will take 8-9 months to resolve.”

In December 2021, the on-time rate of ships from Asia to the US West Coast was only 10.1%, compared with 12.6% in February 2015. Meanwhile, the consultancy estimates that compared with the pre-pandemic baseline, ships will arrive on average 11.5 days late in December 2021, compared with 8.7 days in February 2015.

Sea Intelligence assesses that if recovery starts from December 2021, when the latest data was collected, in this scenario, the container industry will return to normal in August or September this year.

In reality, however, this will take some time, as there are no signs of improvement in carrier schedule reliability as of February. Meanwhile, the 2015 problem only affected the U.S. West Coast. “Now this is a global challenge, and this problem also includes inland logistics issues.” Sea Intelligence said.
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