Welcome to our latest Market Watch update, where we bring you the latest insights and developments in the sea and air freight industries. As we transitioned into April 2024, promising signs emerged for Panama Canal transit, with increased daily allowances set to alleviate congestion and improve transit times. We also cover the stabilization of spot rates on the Asia-to-North America route, the impact of dense fog in key Asian ports, and the complexities of securing fixed-rate contracts for 2024-2025. Don’t miss the opportunity to optimize your logistics strategy — reach out to us today for more information.
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Ocean Freight: Asia to North America
After a turbulent start to 2024, the Asia-to-North America trade lane showed signs of stabilization heading into April — though the environment remained far from calm, with new pressures already building on the horizon.
Spot Rate Stabilization — With Caveats
Spot rates stabilized to approximately half of their late-January highs, offering some relief to importers who had faced a sharp spike in costs during the first quarter. However, a May 1 General Rate Increase (GRI) was already on the table, signaling that carriers were not prepared to let rates settle at current levels heading into peak season.
The pattern reflected a recurring dynamic in the ocean freight market: a brief period of rate moderation followed by aggressive carrier attempts to recapture revenue through surcharges and GRIs. Shippers who used the April window to lock in fixed-rate contracts for the 2024-2025 period were in a better position than those waiting for further declines that ultimately did not materialize.
Asian Port Disruptions: Dense Fog
Dense fog at key origin ports — including Shanghai, Ningbo, and Busan — contributed to closures, congestion, and departure delays during the April period. These weather-related disruptions compounded existing schedule reliability issues, pushing vessel arrivals further off published schedules and creating ripple effects through supply chain challenges for importers with time-sensitive cargo.
For shipments caught in port delays, leveraging a supply chain risk management framework helps teams identify alternative departure windows and manage downstream inventory impacts before they become critical.
Panama Canal: Brighter Days Ahead
One of the most consequential developments in April was the Panama Canal Authority’s announcement of a phased return toward normal operations — a development that had wide-ranging implications for trans-Pacific and Atlantic trade routes.
Expanded Daily Transit Allowances
The Panama Canal Authority (ACP) announced that starting in the second half of May, it would allow 31 ships to transit the canal daily, up from 24 ships per day during the first half of May. By the start of June, the number was expected to rise to 32 ships per day. The canal remained restricted to ships with a 44-foot draft, but the expanded slot availability meant more large vessels could resume canal transits rather than taking the costly Cape of Good Hope detour.
The return to higher capacity was contingent on improved rainfall in the Gatun Lake watershed. Forecasts at the time were cautiously optimistic, and the canal’s recovery proved to be an important factor in capacity normalization across several key trade lanes heading into summer.
Fixed-Rate Contract Terms for 2024-2025
For shippers evaluating annual contract commitments with ocean carriers for the 2024-2025 contract year, the following terms were widely applicable to new NAC (Named Account Contract) agreements:
- MQC (Minimum Quantity Commitment): At least 300 TEU for each NAC
- Weekly MQC: At least 4 TEU per week on a single port pair
- Validity: Rates valid from May 1, 2024 through April 30, 2025
- Bunker surcharges: Inclusive of Q2 bunker costs, backed out at time of filing and floating quarterly per tariff
- Included surcharges: GRI, DTHC, ACC, Panama Canal surcharge, and Suez Canal surcharge
- Subject to: ISPS, TSC, Carbon Tax if applicable
- PSS: Subject to Peak Season Surcharge under mutual agreement
- Cargo eligibility: General cargo of legal weight only
- Final approval: Rates subject to carrier’s final approval and contract filing
If you need help evaluating whether a fixed-rate contract or spot market approach is right for your cargo volume profile, our trade advisory services team can model both scenarios. You can also use our tariff calculator to estimate landed costs under different routing assumptions.
Air Freight: Elevated Rates Persist
The air freight market in April continued to reflect the structural pressures that had kept rates elevated throughout the first quarter of 2024 — well above pre-COVID baselines on most international lanes.
Asia to North America Air Cargo
Air freight rates on Asia-to-North America lanes remained significantly above pre-COVID levels, driven by a combination of factors:
- Continued diversion of ocean cargo to air due to Red Sea disruptions adding transit time and cost to sea routes.
- Sustained e-commerce demand, particularly from Chinese platforms shipping directly to U.S. consumers.
- Tight freighter capacity as belly capacity on passenger routes was insufficient to absorb the volume surge.
For shippers evaluating mode decisions, the calculus between air vs. ocean freight grew more complex in this environment — higher air rates versus longer and less predictable ocean transit times meant total landed cost comparisons required careful, shipment-by-shipment analysis.
Jet Fuel and Middle East Risk Premium
Ongoing conflict in the Middle East posed a direct threat to jet fuel prices, with market participants expecting upward pressure on fuel costs as summer travel season approached. Increased passenger travel in summer typically draws available aviation fuel toward passenger routes, adding further cost pressure to cargo operations.
The disruption to sea freight — particularly in the Red Sea corridor — was simultaneously driving cargo to airlines as shippers sought reliable alternatives. This dual demand pressure (diverted ocean cargo plus structural e-commerce growth) kept air rates elevated even as some analysts had expected seasonal softening.
Geopolitical and Security Developments
April 2024 was marked by significant geopolitical events that had direct implications for global freight markets and route security.
Iran-Israel Escalation
Iran launched a large-scale drone and missile attack against Israel in April, deploying more than 300 drones, cruise missiles, and ballistic missiles in a direct military confrontation. The escalation raised the risk of wider regional conflict, adding to the geopolitical risk premium already embedded in Middle East routing decisions for both sea and air freight. Shippers with cargo moving through or near the Persian Gulf corridor were advised to consult with their forwarders on contingency routing.
MSC Aries Seizure
The MSC Aries container vessel was seized and bound for Iran during this period, a development that rattled container shipping markets. Analysis from Linerlytica noted that less than 2% of containerships active in the Persian Gulf were Israeli-owned, and redeploying those vessels was unlikely to significantly disrupt trade flows on its own — but the signaling effect on insurance premiums and route risk assessments was substantial.
Baltimore Key Bridge Recovery
Recovery at the Port of Baltimore continued following the March 26 Francis Scott Key Bridge collapse. A third temporary channel opened at the collapse site during April, with the Fort Carroll Temporary Alternate Channel providing a controlling depth of 20 feet, 300-foot horizontal clearance, and 135-foot vertical clearance. The progressive reopening of channels allowed increasing volumes to resume at the port ahead of full recovery.
Strategic Outlook: Planning Ahead
The April market environment reinforced several key planning principles for global shippers:
- Evaluate fixed contracts now: Rate stabilization windows don’t last long. Locking in annual contracts during softer spot markets provides budget predictability for the year ahead.
- Build in route flexibility: The combination of Panama Canal restrictions, Red Sea security threats, and port congestion makes multi-routing contingency planning essential.
- Understand your tariff exposure: Geopolitical escalation often precedes trade policy changes. Knowing your Section 232 tariffs and broader tariff exposure positions you to respond quickly.
- Monitor de minimis changes: E-commerce shipping dynamics are shifting with proposed changes to the de minimis rule — understanding how these affect your import strategy is increasingly important.
- Consolidate where possible: During periods of capacity tightness, a sound freight consolidation guide approach can help smaller volume shippers maintain access to vessel space.
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