MARKET UPDATE: DECEMBER 20TH, 2024
CT MarketWatch: Strike – Straight Ahead?
The world shipping and logistics industry is still constantly shifting with geopolitical events, markets, and new carrier initiatives. The report focuses on trends and developments that affect trade lanes and rate movements, mainly in the Transpacific, North and South America, European and Asia-Pacific regions. The ILA strike and transit surcharges at Panama Canal, as well as macroeconomic issues like the Red Sea crisis and US-China trade disputes are key issues. Additionally, regulatory reform and logistics shifted in e-commerce are about to reshape the marketplace for 2025, creating challenges as well as opportunities for supply chain stakeholders.
MARKET WATCH
Ocean Freight
Transpacific Rate Market and Trends
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Transpacific Rates and Market Dynamics:
Spot rates on the Transpacific trade lanes have slightly declined from the December 15 GRI peak. Rates are projected to decrease further by the end of the month as market conditions soften post-holiday rush.
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East Coast Port Strike Looms:
The January 15 ILA strike on the East and Gulf Coasts remains a key concern. Political backing for dockworkers by President-elect Trump complicates negotiations between the ILA and USMX. While the strike could disrupt supply chains, shippers are rerouting cargo through the US West Coast, creating rate surges on these routes.
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Carrier Strategy:
Carriers continue to deploy aggressive pricing strategies and blank sailings to maintain volumes during slack season. Meanwhile, the west-to-east migration trend for cargo may resume in February, reducing pressure on West Coast ports.
North and South American Rate Trends
North America:
Rates to the West Coast climbed due to the ILA strike and blank sailings.
South America:
Mixed dynamics prevail, with rates on the North Asia-WCSA lane declining, while North Asia-ECSA rates experienced a modest increase.
Panama Canal Transit Surcharges (Effective January 1, 2025) – $40/TEU
CMA CGM: Panama Canal transit surcharge applies to Asia-USEC services.
MSC: Panama Canal surcharge applies from Southeast Asia, China, Korea, and Japan to USEC and Gulf.
These surcharges come as the Panama Canal Authority modifies its transit reservation system and tariffs. Expect a ripple effect on USEC rates as carriers pass these costs to shippers.
European & APAC Updates
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Europe:
Asia-Europe spot rates held steady as carriers delay long-term contract negotiations to capitalize on the FAK market.
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APAC:
Rates from Southeast Asia to ECNA spiked due to GRI and potential ILA disruptions, with rates to the West Coast also increasing.
Air Freight
Week 49
Spot Rates:
- Global Air Freight rates hit a 2024 high seeing an increase of 4% week over week.
- Asia Pacific lane rates rose drastically with an increase of 8% Week over Week, seeing similar increase trends for both Africa and European markets.
Yearly Trends:
- The Middle East & South Asia origins saw the highest increases in rate growth of around 62%, which was followed by Asia-Pacific and Europe origin markets at around 19% each.
Outlook for 2025
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Market Trends:
Red Sea Crisis: The ongoing crisis continues to absorb capacity, maintaining higher rate floors and potential schedule disruptions.
ILA Strike: The January 15 deadline could lead to renewed supply chain challenges, particularly on USEC and Gulf Coast lanes. -
Key Drivers:
Overcapacity Risks: Post-crisis capacity normalization may result in overcapacity and softened rates in late 2025.
US-China Trade Tensions: Potential tariff escalations could drive early inventory frontloading, affecting Q1-Q2 volumes. -
Rate Projections:
Asia-Europe: Rates are expected to stabilize post-Lunar New Year but remain elevated compared to pre-2024 levels.
Transpacific: Anticipated rate drops after Q1, with potential GRI spikes in peak seasons. -
E-commerce Impact:
- Growth in sea-air logistics driven by Red Sea diversions and rising B2C demand.
- Regulatory changes, such as the de minimis exemption review, may shift e-commerce volumes away from air cargo.
Need Help Navigating the Current Freight Market?
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