Capacity congestion remains in the wake of labor agreement
Labor agreement reached for the U.S. East and Gulf Coast ports
A labor agreement was reached between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX). The previous agreement was set to expire on January 15, 2025.
Major shipping alliances reshuffle in 2025
In February 2025, MSC and Maersk will dissolve the 2M Alliance. MSC will operate independently but form space agreements with other carriers, including ZIM and the Premier Alliance. Maersk will join forces with Hapag to create the Gemini Cooperation, a new vessel sharing agreement.
THE Alliance will also break up, with Hapag leaving to join Maersk. The Premier Alliance will continue with minimal changes and partner with MSC and the Ocean Alliance. The Ocean Alliance extended its agreement through 2032, maintaining current services, but reducing capacity on the Trans-Atlantic trade lane.
Capacity and congestion
A 10% increase in vessel capacity in 2024 was offset by diversions through the Cape of Good Hope, global port congestion, and a 6% rise in demand, leading to a capacity shortage. Markets impacted by Suez Canal diversions, such as U.S.–India, U.S.–Middle East, and U.S.-Asia, are experiencing more blank sailings.
There is severe port congestion in Asia, Latin America, and North America, particularly on the U.S. West Coast (USWC), due to early peak seasons and strikes.
Global schedule reliability improved slightly to 51.5% in October 2024 but remains 12.8% below last year. Maersk and MSC are the most reliable carriers, while Yang Ming and PIL struggle with flagging reliable numbers.
Asia
Asia–Europe
Annual contract negotiations on the Asia–Europe trade lane continue, with carriers attempting to maintain elevated rates through general rate increases (GRI). Despite these efforts, rates have begun to retreat due to low-capacity utilization. Expect carriers to remain disciplined in holding on GRI increases and plan for rates to remain elevated through January.
Asia–U.S.
Spot rates on Trans-Pacific lanes strengthened toward the end of 2024 and are likely to remain elevated through January 2025. The threat of a U.S. East Coast (USEC) port strike had cast a shadow on demand to the USWC, increasing rates to all U.S. locations. While a labor agreement is now in place, pricing and transit times remain disrupted as port traffic recalibrates. U.S. import tariff hikes and a new alliance starting in February 2025 add to market uncertainty and volatility.
Elevated spot rates in Q1 2025 could benefit carriers in contract negotiations. On Asia–Europe lanes, spot rates are also rising, with successful GRIs in December and more hikes expected early January 2025. Demand and rates strengthened in late 2024, driving 2025 contract rates above last year's.
Expect this positive momentum to continue into January, with firm cargo demand ahead of the Lunar New Year. The Gemini Cooperation, starting February 1, 2025, also has the potential to impact service schedules and capacity.
Europe
Major ports like Rotterdam, Hamburg, and Antwerp continue to combat congestion. These ports are experiencing increased trade volumes and operational inefficiencies, leading to delays and higher costs.
The ongoing disruptions in the Red Sea and Suez Canal have forced many vessels to reroute via the Cape of Good Hope, adding approximately 4,000 miles to each journey and significantly increasing transit times and freight costs.
Additionally, adverse weather conditions and labor shortages are exacerbating delays, with some shipments experiencing delays of up to 14–21 days. The compounded effect of these issues is a notable decrease in schedule reliability and an increase in shipping rates as demand continues to outstrip current supply of equipment.
Mediterranean/India
The shipping routes between the Mediterranean and India continue to adapt and evolve. Carriers are optimizing schedules and reallocating vessels to meet the high demand, ensuring more reliable and efficient services. The introduction of new direct services and strategic adjustments in port calls helps mitigate congestion and delays.
North America
U.S.–Asia
Demand for carrier services via the USWC has increased due to extended transit times through the Cape of Good Hope and the potential ILA strike that was averted in January 2025. Volumes at USWC ports increased 20–30% in Q4 2024 due to early Lunar New Year and freight being pulled forward in anticipation of potential new tariffs.
Port congestion in Asia and USWC ports is causing schedule unreliability and blank sailings. Severe typhoon season in Asia has exacerbated vessel delays and port congestion. Transshipment port congestion in Asia remains significant, with delays of 14–21 days at major ports like Busan, Shanghai, Ningbo, and Singapore.
U.S.–Europe
Ocean carriers have reduced capacity on USEC services by using smaller vessels and reallocating larger ones to Asia trade lanes, where demand is stronger. Increased blank sailings due to port congestion have tightened vessel space. The Ocean Alliance and Premier Alliance will merge their Trans-Atlantic services in February 2025, further reducing capacity.
Carriers are overbooked on all water services from USWC ports, with Hapag exiting and the Ocean Alliance joining this service. Significant port congestion issues persist at key west Mediterranean ports, exacerbated by severe flooding in Valencia.
U.S.–LATAM
Schedule reliability to East Coast South America (ECSA) ports has been impacted by significant delays at Navegantes and Rio Grande ports in Brazil, leading to blank sailings and port omissions. Heavy rains in southern Brazil have added to the delays and congestion, causing carriers to omit these ports and transship via Santos or other ports.
Congestion has spread to Itapoa and Paranagua ports due to vessel diversions. Space from U.S. Gulf Coast (USGC) to ECSA and West Coast South America (WCSA) ports has tightened due to delays at transshipment and southern Brazil ports. Increased congestion at transshipment ports in Panama, Caucedo, Cristobal, Cartagena, and Kingston is causing significant delays.
U.S.–South Asia, Middle East, Africa (SAMA)
Monthly rate increases to the Middle East are due to service instability and tight vessel space. USEC and USGC ports to India and the Middle East are impacted by diversions via the Cape of Good Hope, causing longer transit times and blank sailings.
Red Sea port services are suspended or accessed via congested Mediterranean ports. Limited services to Persian Gulf ports and increased piracy near Somalia are affecting schedules. Congestion at southeast Asia and Jebel Ali ports is causing carriers to use alternative hubs, which are also becoming congested.
U.S.–Oceania
Space remains tight with direct carriers, but with peak season winding down, demand is expected to decrease in the first quarter of 2025, improving space availability. Sporadic port omissions on USEC and Australia services are occurring due to delays at EU/U.S. ports and adverse weather at Australia ports.
Delays on transshipment services via Asia into Oceania are expected due to congestion at Asian ports. Brown marmorated stink bug (BMSB) season has been in effect for cargo from North America ports since September 1, 2024. This means fumigation requirements for certain commodities.
Canada
The freight market remains generally soft, with tightness from the Canadian West Coast to western Canada due to seasonal freight moves and a lack of outbound loads from the United States. Holiday-related congestion continues through the early part of January.
A potential 25% tariff on products from Canada to the United States, announced by President-elect Trump, is causing concern, particularly regarding the impact on freight flow and the supply of drivers, as Canada relies heavily on immigration for its driver workforce.
The national strike by the Canadian Union of Postal Workers between November 15–December 17, 2024, led to the suspension of international mail acceptance to Canada by United States Postal Service (USPS), severely disrupting mail processing and delivery.
On December 23, 2024, USPS issued the following statement, implying that impacted shippers should continue to monitor this situation throughout January 2025, “USPS suspension of acceptance of mail and packages bound for Canada remains temporarily unchanged as we monitor Canada Post’s progress as they process the volumes that were staged during the strike. We anticipate reopening acceptance of Canada bound volume within the next two weeks and we appreciate our customers patience as we continue to monitor developments in Canada.” Check the USPS website for the latest information regarding the status of this service suspension.
South Asia, Middle East, Africa (SAMA)
Market dynamics in January 2025 are heavily influenced by the upcoming Lunar New Year, particularly impacting Asia–India trade. Expect tight space, increased rates, and blank sailings. While cargo demand remains light in regions like North America, Oceania, Gulf, and Africa, Europe shows potential for growth due to the grape season.
Expect inventory shortages in select locations and rate hikes across specific trade lanes to continually shape the logistics landscape. Plan accordingly to navigate these seasonal shifts effectively.
Additionally, the launch of the new IOX service by ONE/YML/HMM from India to North Europe in February 2025 under the PREMIERE Alliance consortium is noteworthy. Overall, capacity remains stable from India to all sectors, but Asia–India routes will face significant pressure.
South America
LATAM
The Agência Nacional de Transportes Terrestres (ANTT) from Brazil updated transport regulations, authorizing occasional trips between Brazil and Argentina, Chile, Paraguay, Peru, and Uruguay, and establishing new protocols for safer and more environmentally responsible operations.
However, logistics costs in Brazil increased when diesel prices reached their highest average of the year in December 2024. In Argentina, logistics costs rose by 2% in December 2024, with the informal dollar exchange rate now matching the official rate. Uruguay's exports to Mercosur grew by 8.96%, demanding more road transportation services. In Colombia, trucking companies face significant delays and costs due to roadblocks and rising fuel prices.
Chile and Colombia are advancing in digital platforms for logistics efficiency, while Peru invests in infrastructure projects. There is a growing demand for premium warehouse space in Chile. Specific issues include a shortage of 40' high cube containers in Cali, high congestion at the port of Callao, and delays in Chile due to high port congestion and seasonal demand.
Oceania
North America
Market conditions became congested during the labor negotiations disrupting the USEC and Canadian ports in Montreal and Vancouver. Even though an agreement is now in place, pricing and transit times remain disrupted as U.S. port traffic recalibrates. While demand is increasing, expect a soft peak season into the new year. Delays on U.S. imports are due to delays at Asian transshipment ports.
Europe
The Europe to Oceania market is tightened due to disruptions in the Red Sea/Suez Canal, with rerouting via the Cape of Good Hope. Rates are expected to remain stable through December and potentially into Q1 2025. Monitor port congestion and bad weather impacts on schedule reliability.
Asia
Low volumes and demand continued throughout Q4 2024, with capacity adjustments through port omissions and blank sailings.