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The Merchant · n°128 · December 19, 2024

Trump introduces wild card into vital contract talks

Figure of the week

+13.8% The impressive rebound in carbon emissions from containerized ocean transport during the first 10 months of 2024, compared to 2023, according to a study by Xeneta and Marine Benchmark. A sad record caused by the de facto closure of the Red Sea.

Quote of the week

“I’ve studied automation (of ports) and I know pretty much everything there is to know about it.” Donald Trump, modest as ever, took a position in the conflict pitting the East Coast dockers’ union ILA against the port operators. A strike is still possible on January 15. Read more below.

High spot rates still expected in early January

The world’s shipping lines have reason to be satisfied, European shippers a little less so: spot rates from Asia are holding at high levels at this year’s end. According to the SCFI (Shanghai Containerized Freight Index), they would even have tended to rebound again this week. To be confirmed in the coming days.

“Freight rates should remain stable during the first half of January,” analyzes Héloïse Roux, ocean expert at OVRSEA. Same story on the Linerlytica side, which sees the current “positive momentum” continuing next month, ahead of Chinese New Year and before Donald Trump’s inauguration in Washington.

On the Asia-Europe trades, currently the most expensive, some pressure is being felt as CNY approaches, a trend that is however entirely normal at this time of year. On the other hand, it would appear that port congestion is impacting certain major ports in Asia and Europe. Even though the situation has improved since last week in the Far East, Linerlytica states that the ports of Shanghai and Ningbo still show up to 2 days of delay. In North Europe, which is seeing December’s shipments arrive, congestion is notably high in Hamburg, Rotterdam, Antwerp or London Gateway. Berthing delays there can reach 4 days.

Port strike in the United States: there it is, Donald Trump has taken a position

Less than a month before the possible return of the strike, the dockers of the ILA union and the port operators of the East Coast and the Gulf of Mexico, represented by the USMX, still have no agreement. This one must concern the automation of gantry cranes in the container ports of the coast: the USMX considers it indispensable to develop the productivity of these ports, the ILA flatly refuses it.

But now Donald Trump has entered the dance. After a meeting with the ILA leader at his Mar-a-Lago residence, the future president took a position in favor of the dockers. “These foreign companies should hire our incredible American workers, instead of laying them off,” he declared, an allusion to the shipping lines that hold numerous port terminals in the United States. This official support does not mean that the January 15 strike will not take place, but the pressure is now on the shoulders of the USMX. The latter counter-attacked, asserting that American businesses and consumers would be the most affected by the lack of productivity in US ports.

In the meantime, the Transatlantic trade (Europe-United States direction) should see sustained activity until the end of the year, before a usual slowdown starting in January and throughout the first quarter. On the Transpacific side finally, the signals are contradictory: Drewry’s latest WCI showed a 4% drop on Shanghai-Los Angeles, but the SCFI rebounded by nearly 22% at the start of the week, according to Lars Jensen. The awakening has begun.

In brief. HMM back on the Transatlantic, with Le Havre on the schedule. Absent from this trade since 2018, HMM will relaunch in early February a transatlantic service named TA1 (Transatlantic 1), all the way to the West Coast, via Panama. TA1 will be operated in collaboration with ONE. The full rotation: Southampton – Le Havre – Rotterdam – Hamburg – Antwerp – Miami – Cartagena – (Panama Canal) – Rodman – LA/LB – Oakland – Rodman – (Panama Canal) – Caucedo – Southampton.

In the air, the e-commerce wave recedes, the peak has passed

With the close of Christmas shipments, air freight from Asia has been losing steam for a few days. E-commerce-related volumes have fallen sharply, as observed at OVRSEA. As a result: capacity is freeing up and delays in the main Chinese hubs (Shanghai PVG, Beijing PEK, Shenzhen SZX) are decreasing. Spot rates are also trending downward, a decline that should continue until the end of the month, before a likely rebound in anticipation of Chinese New Year in late January.

To the west this time, on the Transatlantic trade, something new: rates are rising sharply. Two main reasons identified: winter schedules and the shift of cargo aircraft toward the more lucrative Asian trades have clearly reduced available capacity, putting the market under strain. According to the Baltic Air Index (BAI), average spot rates between Europe and the United States recorded a weekly rebound of 27% last week (Frankfurt is used here as the reference European hub). This rate had not been so high since March 2023. WorldACD’s latest indicators point to a 12% rise on China-Europe and even 20% from Taiwan. They are on the other hand stable from Hong Kong.

While the e-commerce boom upended the market this year, in 2025, Xeneta forecasts a rebound in traditional B2B air freight. Semiconductor imports, driven by the rise of AI, could pull the market.

👋 See you next week, The Merchant team

Sources

Go further

How much does a freight forwarder cost, and how to avoid hidden fees? → How to import from China to Europe, step by step → BAF, GRI, demurrage: how to read the surcharges on your freight invoice →

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