As Retail Hails East Coast Port Deal, US-Bound Container Prices Might Ease
Glenn Taylor
5 min read
In the hours after East and Gulf Coast port dockworkers and their maritime employers reached a tentative labor agreement and averted a possible strike, retailers are breathing a sigh of relief while ocean carriers could miss out on another spike in container prices.
The National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA), two top U.S. retail trade associations and lobbying groups, overwhelmingly supported the new, yet-to-be-ratified six-year deal between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX).
“Providing certainty with a new contract and avoiding further disruptions is paramount to ensure retail goods arrive in a timely manner for consumers,” said Jonathan Gold, vice president of supply chain and customs policy at NRF, in a statement. “The agreement will also pave the way for much-needed modernization efforts, which are essential for future growth at these ports and the overall resiliency of our nation’s supply chain.”
After months of front-loading goods into the U.S. ahead of the ILA’s three-day Oct. 1 strike at ports from Maine to Texas, retailers decided to do the same in November and December as the prospects of a second strike appeared to be more of a threat.
The strike scenario was further compounded by the fact that there were only five days between the Jan. 15 contract expiration date and the Jan. 20 inauguration of President-elect Donald Trump, who has vowed to enact tariffs on China, Mexico and Canada on day one of his presidency.
But with a strike more than likely averted, retailers at least have one of multiple potential distractions off their plate.
“Operating at full capacity and without the stress of potential disruption looming, retailers can continue delivering for consumers without delay or added costs and the U.S. economy can push forward on the right track for growth,” said RILA in a statement, calling the agreement a “welcome relief” for all industries reliant on the ports. “We urge a quick ratification of the agreement to eliminate the element of uncertainty that has long lingered over supply chains and the U.S. economy.”
Retailers and brands are likely to benefit from lower freight rates for goods entering the U.S. in the weeks ahead, as concerns about capacity issues on major container lines continues to ease.
“We have seen average spot rates on the trade from the Far East to U.S. East Coast spike 26 percent since Dec. 14 to stand at $6,800 per 40-foot container (FEU). Carriers were poised to add further disruption surcharges of up to $3,000 per FEU should the strike have gone ahead,” said Emily Stausbøll, a senior shipping analyst at ocean and air freight benchmarking service Xeneta. “Looking ahead, it is likely spot rate growth will now soften on trades into the U.S. from the Far East, suggesting a brighter outlook for shippers negotiating new long-term contracts.”
Ocean carriers like Mediterranean Shipping Company (MSC), Maersk, Hapag-Lloyd, CMA CGM and Cosco Shipping are USMX members, and would have benefited from a multi-day port strike due to the likely increases in spot freight rates as supply was removed for the market.
But now that there aren’t concerns about the rerouting of containers to alternate ports, increased berthing times or extended container dwell times, the container shipping firms aren’t likely to reap the reward of higher freight rates.
Global markets appeared to reflect this school of thought in the wake of the ILA-USMX joint announcement.
While US markets were closed, trading overseas saw Maersk’s stock tumble nearly 6 percent, while Hapag-Lloyd’s share price plummeted more than 8 percent. Cosco, which already took a hit to share price after the U.S. designated the shipping company as a Chinese military asset, saw stock sink again nearly 5 percent on Thursday.
Israel-based ZIM, which is the only major public container shipping company to trade on a U.S. exchange, saw its stock decrease more than 3 percent in the hour after the announcement was made Wednesday.
The threat of an East Coast port strike may have been keeping wider rates up, as container prices had already been sinking on routes to Europe in December and January, platforms like Xeneta and Drewry have observed.
“Signs of a weakening underlying global market in 2025 are also seen in falling average spot rates from the Far East to North Europe, which spiked in Q4 last year,” Stausbøll told Sourcing Journal.
As of Thursday, the Xeneta Shipping Index says the average 40-foot container from the Far East to northern Europe declined 1.9 percent in price from the week prior, and 3.6 percent from the month prior to $4,923.
Drewry’s World Container Index (WCI) indicates an even stronger dip on the Shanghai-to-Rotterdam trade lane, with weekly spot rates decreasing 8 percent to $4,375 per container. Month-over-month rates dropped nearly 10 percent.
That’s not to say the carriers won’t still benefit in the immediate short term from the recent higher prices for U.S.-destined cargo. In its Thursday WCI update, Drewry said it still expects rates on the trans-Pacific trade to rise in the coming week, driven by the front-loading ahead of the anticipated tariff hikes under the incoming Trump administration.
“Shippers must still be cautious because it will not take much for freight rates to begin spiraling up once again, particularly given the ongoing conflict in the Red Sea and the return of Trump to the White House, which could escalate the U.S.-China trade war,” Stausbøll said.
