News / THE Alliance plans to 'port-hop' if strike goes ahead, says Yang Ming

26/09/2024

Carrier members of THE Alliance could resort to ‘port-hopping’ or skipping calls at strike-hit US east and Gulf coast ports, according to Yang Ming president Cliff Pai.

He said yesterday that a strike from 1 October would shut down the ports, impacting Yang Ming and THEA fellows Hapag-Lloyd, ONE and HMM.

Mr Pai said: “While shippers have begun diverting containers to the US west coast, it is not a perfect solution as US inland transportation has limited capacity. Once a strike occurs, it will be a test for shipping companies to see how quickly ships can be diverted.

“We’re evaluating port-hopping in the first week [of a possible strike] to allow ships to unload cargo. Should the strike continue for a second week, it will be difficult to predict its impact.”

Depending on where the ship is coming from, options could include Caribbean transhipment hubs and Mexican and Canadian gateways.

Like several of its peers, Yang Ming has begun imposing congestion surcharges of $800/teu, $1,000/feu and $1,000 per 45ft container, in response to potential strike-induced increased operating costs,

In H1 24, Yang Ming’s net profit rose nearly seven-fold, to $729.82m, as the Red Sea crisis and an early start to the usual Q3 peak pushed up freight rates. Chief commercial officer Kevin Lee admitted that while Q4 tended to be quiet, management was optimistic of a mini-peak at year-end, as the Chinese New Year holiday will fall earlier next year, in January.

Mr Lee continued: “The usual small peak in shipments is expected to occur in the later part of the fourth quarter. The Red Sea crisis is also difficult to resolve in the short term. Geopolitical conflicts in the Middle East, port congestion and the imminent strike on the US east coast will affect the stability of the supply chain.”

He revealed that talks with shippers regarding long-term shipping contracts for Asia-Europe shipments had begun.

“Although actual negotiations have not yet officially started, there have been exchanges of opinion. At present, the trend for long-term contract rates isn’t obvious, but we’re more optimistic than last year.”