The interim ILA-USMX deal, which was established at the end of the three-day October strike, is quickly coming to an end on January 15. With the parties at odds over the role of automation and semi-automation at these ports, negotiations swiftly broke down in November after they had resumed. Although carriers are bracing for a strike, negotiations are set to resume soon. Maersk has advised shippers to pick up or return containers at East Coast and Gulf ports as soon as possible, and some carriers have announced mid-month disruption surcharges that range from US$850 to US$2,000/FEU. Given that the deadline is five days before the inauguration and that President-elect Trump has openly supported the ILA’s opposition to automation, there is conjecture that the USMX comprises primarily foreign ocean carriers.
However, some believe that if the carriers anticipate losing anyhow, they might continue to do so, which would lead to congestion, backlogs, and short-term increases in freight prices and carrier revenue. Ports and airlines will probably announce more preparations similar to those in late September if the negotiations do not result in an immediate resolution. Reefer booking suspensions, extended gate hours, deadlines for container pickup or drop-off, some vessel diversions to East Coast alternatives for ships arriving around the deadline, and stopped clocks on demurrage charges for containers stuck at ports during the strike were some of these measures.
The availability of vessels and containers at origin ports in Europe and Asia would eventually be impacted by a protracted shutdown, potentially expanding the strike’s effects outside of North America and resulting in delays and higher rates for lanes departing from those centers. With the busiest shopping season barely behind them, many shippers may be content to have containers wait at sea or in ports rather than deal with the extra expenses and inconvenience of a coastal move; thus, a major shift in volumes or diversions to the West Coast is largely improbable.
Regardless of the potential strike, pre-Lunar New Year demand drove a substantial increase in transpacific container prices to begin the year on GRIs. With West Coast pricing already 20% higher than their LNY peak last year and East Coast rates 3% higher, prices have reached the $6,000/FEU level on the West Coast and are roughly US$7,000/FEU on the East Coast. Ahead of anticipated tariff increases, volumes are probably already higher than normal on some frontloading. There is doubt that another attempt at an increase would be successful so near to the holiday season, even though some carriers are thinking about implementing an extra GRI in the middle of the month.
After sharp rises in November and early December, rates for Asia-Europe and the Mediterranean only slightly increased this week. This was because LNY demand on these lanes began earlier than typical this year due to lengthier lead periods from Red Sea diversions. In China, where delays of up to four days have been reported in Shanghai, Qingdao, and Ningbo, as well as in the Philippines and Vietnam, the pre-holiday rush and some unfavorable weather are already causing more traffic and equipment shortages.
Ports in Spain and Italy, as well as major European centers like Hamburg and Rotterdam, are experiencing delays and congestion due to labor shortages and strikes in some regions. These elements might put more upward pressure on rates in the run-up to LNY. Later in February and early in March, as seasonal demand declines, ex-Asia rates should ease. Prices may return to the US$3,000–US$4,000/FEU Red Sea-adjusted floor that was reached in March and October for trade between Asia and Europe, although rates may not ease as much due to the transpacific’s ongoing frontloading ahead of anticipated duties.
Freightos Air Index data indicates that ex-China rates have begun to drop as the peak season for air freight has ended. Prices between China and North America have dropped to roughly US$6/kg after rising beyond US$7/kg in December. This level was maintained for a large portion of H2 of last year, but since e-commerce volumes continue to influence the market, it is still significantly higher than the long-term non-peak average of roughly US$2/kg. Air fares from Asia to Europe momentarily surpassed $5.00/kg in mid-December before dropping back to US$3.44/kg last week. Additionally, transatlantic rates have recently decreased to US$2.12/kg after rising 75% to above US$3/kg between October and mid-December. Peak season capacity changes to the Pacific are largely responsible for the pricing increase on this channel.
