MARKET UPDATE: JANUARY 3RD, 2025
CT MarketWatch: ILA Strike Threat, Tariff Shifts, and Market Trends to Watch
As 2025 unfolds, the global freight and logistics landscape feels like a blend of calm before the storm and cautious anticipation. The transpacific sea freight market shows signs of stability, a welcome reprieve for shippers after a turbulent year, yet the looming East Coast port strike casts a shadow of uncertainty. Carriers are working strategically to steady the ship with blank sailings and capacity management, but tensions remain palpable. Meanwhile, air freight is soaring on the momentum of a record-breaking 2024, bringing hope for resilience despite persistent capacity challenges.
Closer to home, trucking markets are inching upward, offering mixed signals as shippers brace for significant changes to NMFC classifications. It’s a time for agility and foresight, as surcharges, labor negotiations, and shifting rates continue to shape a rapidly evolving supply chain. In the midst of these challenges, the industry’s resilience and adaptability shine as a beacon for navigating another pivotal year in global trade.
MARKET WATCH
Ocean Freight
Transpacific Rate Market and Trends
- Transpacific Rates and Market Dynamics:
Spot rates on the Transpacific trade lanes have largely stabilized, with minimal changes following the December peak. Rates are expected to remain steady into early January, supported by blank sailings and cautious market conditions post-holiday rush.
- East Coast Port Strike Looms:
The potential January 15 International Longshoremen’s Association (ILA) strike remains a significant concern. Negotiations between the ILA and the US Maritime Alliance (USMX) are ongoing, with no resolution in sight. The uncertainty has prompted some shippers to reroute cargo through West Coast ports, creating localized rate pressures. East Coast operations face potential disruptions, with mixed sentiment on long-term impacts.
- Carrier Strategy:
Carriers continue leveraging blank sailings and strategic capacity management to stabilize rates during the slack season. While rates to the West Coast have seen slight upward pressure, the east-to-west cargo migration trend could ease strain on East Coast ports if a strike occurs.
North and South American Rate Trends
-
North America:
- West Coast rates remain steady, with isolated increases attributed to rerouted cargo and blank sailings. East Coast rates face uncertainty amid ILA-related concerns.
-
South America:
- North Asia to West Coast South America (WCSA):
- Rates have softened due to reduced demand and overcapacity.
- North Asia to East Coast South America (ECSA):
- Rates have seen modest increases driven by seasonal demand shifts.
- North Asia to West Coast South America (WCSA):
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
-
Europe:
- Spot rates on Asia-Europe lanes remain stable as carriers delay long-term contract negotiations, aiming to benefit from higher FAK rates.
-
APAC:
-
East Coast North America (ECNA):
- Rate increases driven by General Rate Increase (GRI) implementations and uncertainty surrounding the ILA strike.
-
West Coast North America (WCNA):
- Rates have also increased, reflecting stronger demand and tight capacity management.
-
Overall, APAC markets show resilience amid regional demand fluctuations and proactive carrier strategies.
Air Freight
-
Spot Rates:
- As we step into 2025, the air freight market is expected to maintain its upward momentum in spot rates, reflecting the peak seen in late 2024. Global air freight rates hit a year-high in December 2024, with a 4% week-over-week increase. This trend is poised to continue as demand stabilizes at elevated levels. Asia-Pacific lane rates showed remarkable resilience with an 8% weekly increase during the same period, mirroring growth trends observed in African and European markets. For 2025, these regions are anticipated to see further rate adjustments driven by robust demand and capacity constraints.
-
Yearly Trends:
- Air freight rates from the Middle East and South Asia region have increased to an unprecedented 62% in 2024, illustrating their increasing importance to global trade. Origin markets in Asia-Pacific and Europe grew at around 19% and 19% respectively. Against the backdrop of these shifts in the dynamics of trade, economic recovery, and increasing e-commerce volume, 2025 will reinforce this trend moving forward. Pricing and operational dynamics will be influenced by the continued growth in air freight capacity and improved efficiency of the supply chain.
Domestic
-
Less-Than-Truckload (LTL):
Changes coming to NMFC classifications in 2025
The NMFTA is in the process of making changes to the NMFC classification system. Changes will not go into effect until May of next year, but it is going to impact many shippers.
NMFTA initially announced they would be changing over 5,000 NMFC item numbers to a density-based scale. The most recent update listed over 3,000 of those items as Out of Scope for the 2025-1 docket. Reviews are ongoing and the final list will be available in January.
Here’s a timeline of the changes:
- January 2025: Docket 2025-1, a list of NMFC items that are potentially going to change, will be available for review.
- March 2025: The NMFTA will hold a public meeting to discuss the changes.
- May 2025: NMFC changes will go into effect.
To stay updated, visit the 2025 NMFC Changes page on the NMFTA site.
- Truckload (FTL):
In November, we saw overall truckload rates climb 2.4% month-over-month (M/M), trending up slightly after several weeks of stagnation.Looking at equipment types, dry van (1.8%) went up a notch, refrigerated moved up 3.5%, and open deck moved down -1.6%. Looking at year-over-year (Y/Y) comparisons, we continued our venture into inflationary territory in total (12.0%), dry van (12.0%), reefer (12.3%), and flatbed (4.7%).
Chinese Holiday Schedule 2025
New Year:
January 1st:
1 day
Chinese New Year:
January 28th – February 4th,
8 days
Tomb Sweeping day:
April 4th – April 6th
3 days
Labor day:
May 1st – May 5th
5 days
Dragon Boat festival:
May 31st – June 2nd
3 days
Mid-Autumn Festival:
October 1st – October 8th
8 days
Need Help Navigating the Current Freight Market?
📰 IN OTHER NEWS…
Suez toll revenue drops 60%; canal tests two-way traffic
Suez Canal revenue has plunged 60% this year, a loss of $7 billion for Egypt, amid attacks on shipping in the Red Sea and ongoing regional tensions.
Read More
Trump’s tariffs: A boost for domestic trucking demand
Over the past few months, a number of folks in the media have compared tariffs to sales taxes. While tariffs are a form of taxation, they are fundamentally different from sales taxes.
Tariffs are imposed at the import stage based on the declared value of goods, which does not include subsequent costs like labor, marketing or retailer profit margins. Consequently, the effect of a tariff on the retail price is typically less than the tariff rate itself.
Read More
Cape of Good Hope detours look set to continue until ‘August, at least’
The impending network changes made by the big container lines look set to ensure continuation of services around the Cape of Good Hope until the latter half of 2025.
Read More
Container imports to surge ahead of strike, tariffs, NRF predicts
Containerized imports are expected to continue to surge through U.S. ports into the new year as shippers look to beat a possible strike by East and Gulf Coast longshore workers and planned tariffs by the incoming Trump administration, according to a new forecast.
Read More
Borderlands Mexico: Mexican government aims to regulate Asian e-commerce imports
The Mexican government plans to enforce new customs regulations affecting e-commerce imports into the country starting in January.
The requirements — which include additional documentation and more detailed product information for cross-border transactions — are aimed at cutting down on tax fraud, smuggling and other violations.
Read More
Have you met Captain?
Our End-to-End Visibility Platform
Visibility done right so that you can manage compliance, budget and expectations. Empowering you to confidently control your supply chain and deliver happiness to your customers.
We are ready to help
Logistics Solutions at your fingertips
We have team members ready to answer your questions.
Give us a call 516.593.5871 or chat on our website 💬
