The Merchant · n°130 · January 16, 2025

Shippers' solace may be short-lived

🚢 A rate war between carriers?
🍾 A weight off the shoulders: strike averted
✈️ Air still boosted by e-commerce

Figure of the week

2 million In TEU, the additional containerized ocean transport capacity that will arrive on the market in 2025, thanks to deliveries of new container ships, according to Alphaliner.

Quote of the week

“The sovereignty of our canal is non-negotiable (…). The only hands controlling the canal are Panamanian and it will stay that way!” The statement by Panama’s foreign minister, Javier Martinez Acha, quoted by Reuters. He was reacting to recent threats from Donald Trump, who dreams of regaining control of the canal.

Asia-Europe: are we about to see a rate war?

First toward North Europe, now toward the Mediterranean, spot rates from Asia have trended downward, two weeks before the start of Chinese New Year (CNY). This price decline should continue at least until February. During the first three weeks of February, with the holidays in China, we should expect a temporary return in force of blank sailings on the trade, which will at the same time see the launch of the new Gemini Cooperation and Premier Alliance alliances, and of MSC’s solo network.

We will be entering the unknown. Once CNY has passed, it is likely that carriers will reactivate their full operational capacities in order to capture market share. Competition could rage against a backdrop of soft demand, which would then pull spot rates down. Aggressive pricing strategies also seem to already be at work, on the Maersk or MSC side. A rate war in this historic period of reconfiguration of the landscape is possible. Alongside this, the introduction of the new alliance networks could cause operational disruptions for several months, MSC estimates.

Overall, “market sentiment has turned negative,” Linerlytica sums up. While awaiting more information about Donald Trump’s commercial strategy, 2025 begins amid uncertainty at every level.

United States: the strike is averted, rates will ease

The good news came last week: the ILA union and the representatives of the port operators of the USMX reached an agreement, narrowly avoiding a new strike in the ports of the east coast and the Gulf of Mexico.

But what’s in this agreement? According to the Wall Street Journal, in addition to the wage increase validated in the fall, port automation is firmly regulated. The agreement would require a docker to supervise every semi-autonomous crane deployed. Operators will have a free hand to modernize ports and add new technologies, as long as this does not reduce headcount.

This announcement in any case reduced the pressure on the ports concerned and, by extension, on the transatlantic and especially transpacific trades, toward which part of the flows was starting to be redirected. After a clear increase in early January, spot rates between Asia and North America should therefore now follow the Asia-Europe trend and come back down. The congestion surcharges and other PSS linked to the strike are cancelled.

In brief. Speculation around Trump’s tariffs is running high. Not a day goes by without a new analysis or speculation around Donald Trump’s tariff strategy, whose inauguration will take place this January 20. While some think they know that the promised customs duty increases could rise gradually over time, the National Customs Brokers & Forwarders Association of America (NCBFAA) for its part warns that the future administration could in fact strike hard and fast: 10 to 20% on almost all imports, 60% on imports from China and 100% on goods from any country that has abandoned the dollar as a reserve currency. Trump could use special legislation to bypass Congress and move quickly.

Air freight goes through its CNY rush

Unsurprisingly, air freight activity from China rebounded sharply as Chinese New Year approaches. The rush should last until January 29, the first day of the Chinese festival. Beware: rates are rising and access to capacity is becoming difficult in Chinese hubs.

On the Transatlantic axis, despite the resolution of the union conflict on the east coast, the current reduction in air services will no doubt keep rates at their current high levels until at least mid-February.

Overall, air freight is riding a very robust momentum. According to Xeneta, December 2024 marked the 14th consecutive month of double-digit growth in global demand. At the heart of this dynamism, e-commerce from China should continue to guide the market this year. But beware, this carries risks, as Niall van de Wouw (Xeneta) points out: air freight is becoming “increasingly dependent on e-commerce volumes,” he says. Yet it is also highly “sensitive to geopolitical tensions.” For the analysis firm, the sector should nonetheless continue to grow by 4 to 6% in 2025, while supply will increase only by 3 to 4%. This suggests generally high freight rates all year long, but also a strong tendency toward volatility. In early January, according to WorldACD, the global average spot rate was 22% higher than its level a year ago.

👋 See you next week, The Merchant team

Sources

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