Continued port congestion causes delays
General updates
United States East Coast labor agreement until January 15, 2025
On October 3, 2024, after three days of strikes at the United States East Coast (USEC) and United States Gulf Coast (USGC) ports, the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reached a tentative wage agreement. They have extended the Master Contract until January 15, 2025, to continue negotiations on other issues, including wage increases, benefits, and limits on port automation.
The ILA is particularly concerned about the impact of automation on job security, fearing that increased use of automated systems could lead to significant job losses. Additionally, they are advocating for better health and retirement benefits to support their members. This contract covers most U.S. East and Gulf Coast ports and aims for a new six-year agreement.
Since September, shipments via the United States West Coast (USWC), where carriers arrange the inland rail, have faced increased dwell times at ports before loading. Many shippers, who rerouted to the West Coast and rail to avoid East and Gulf Coast disruptions, plan to continue this strategy until a final agreement is reached. Significant relief in West Coast congestion is not expected soon, as railcar shortages persist, causing containers to stack up at terminals and disrupting the first-in-first-out pattern.
Port congestion
Due to vessel diversions from the Suez Canal situation, adverse weather in Asia and Latin America, and an early peak season on all Asia trades, severe congestion is cropping up amongst major transshipment ports. Specifically, in Asia, ports like Shanghai, Ningbo, and Singapore are heavily congested. In Latin America, key ports such as Santos and Manzanillo are facing similar issues. The West Mediterranean has not been spared, with ports like Valencia and Algeciras experiencing significant delays.
In North America, the early peak season and cargo diversions from the East Coast to the West Coast due to the ILA strike are causing major congestion, especially at ports like Los Angeles and Long Beach. This creates friction in carriers’ ability to maintain their standards of schedule reliability. Based on the latest statistics compiled by Sea Intelligence, schedule reliability slipped 10% year over year (y/y) compared with 2023.
Suez Canal
Since December 15, 2023, most maritime carriers have announced they will avoid the Suez Canal following a sequence of attacks on container vessels launched from a part of Yemen.
Most vessels now travel around the Cape of Good Hope, which adds, on average, 14 days to transit time. This longer transit route has a significant impact on global shipping—not just on trade that moves via the Red Sea, but across all global trade lanes.
Blank sailings and service changes may continue. It is estimated that 6–9% of global capacity is absorbed by this alternative routing.
Shipping alliance updates
The shipping industry is set for significant changes in 2025 with the dissolution of the 2M Alliance between MSC and Maersk. MSC has reached a vessel sharing arrangement with ZIM on the Trans-Pacific lane and with Premier Alliance on the Asia–Europe lane.
Hapag-Lloyd is gearing up for a new alliance with Maersk in February of 2025, called the Gemini Cooperation, and ending its cooperation with ACL and adjusting its port calls. This new alliance aims to enhance schedule reliability through a hub-and-spoke network, although its success will depend heavily on the effectiveness of their transshipment program.
Meanwhile, the Ocean Alliance (ONE/Yang Ming Line/Hyundai Merchant Marine) has extended its agreement until 2032, providing some stability amidst the upheaval.
Asia
Asia–Europe
Spot rates on the Trans-Pacific and Asia-Europe trades are diverging. The ILA strike ended quickly during China’s Golden Week holiday. USEC rates have dropped, while USWC rates remain steady. Demand and rates outlook is muted.
Rates to North Europe and the Mediterranean are continuing to decline, though at a slower pace. Carriers have announced a General Rate Increase for early November, and bookings are picking up compared to October. Carriers aim to maintain rates ahead of 2025 contract negotiations. We need to monitor the rate hikes and their sustainability.
Trade volumes will need to increase to curtail further rate drops, as there are limited blank sailings in November.
Asia–U.S.
We have entered the slack season after China’s Golden Week holiday, but carriers have not announced any winter deployments that would reduce capacity. Instead, November shows an 8% capacity increase to both the West Coast and East Coast compared to October. Demand remains steady, likely due to companies mitigating risks around the January 15 deadline for East and Gulf Coast labor negotiations. Despite a slow decline, rates are still elevated compared to pre-pandemic levels.
Ports in China, including major transshipment hubs like Shanghai and Ningbo, are experiencing significant congestion, while ports such as Shekou and Yantian are currently operating more smoothly.
Europe
Following the North American port strikes, dwell times have increased at all affected ports, including overflow ports like Los Angeles/Long Beach and Seattle/Tacoma. Bookings now need to be made three weeks in advance on Trans-Atlantic Westbound (TAWB) and Trans-Atlantic Eastbound (TAEB) routes. Demand on TAWB continues to rise due to peak season and delays from the strikes.
All carriers have canceled their strike surcharges. Additionally, ports like New York/New Jersey are working extra hours to clear backlogs, but it may take up to two weeks to return to normal operations.
Mediterranean/India
The shipping routes between the Mediterranean and India continue to adapt and evolve. Carriers are optimizing their 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 are helping mitigate congestion and delays.
North America
U.S.–Asia
Carriers are seeing increased demand for services via the USWC due to extended transit times through the Cape of Good Hope and cargo diversion from the recent ILA strike on USEC and USGC ports.
Volumes at USWC ports have risen by approximately 16-20% compared to the same period in 2023. Port congestion in Asia and at USWC ports, as well as some USEC ports like Charleston, is causing schedule unreliability and potential blank sailing weeks.
Major transshipment ports in Asia, such as Busan, Shanghai, Ningbo, and Singapore, are experiencing delays of 14–21 days due to increased transshipment services. Some carriers have switched to alternative transshipment hubs in Malaysia, India, and Colombo, leading to congestion in those ports as well.
U.S.–Europe
Ocean carriers have reduced capacity on USEC services by deploying smaller vessels and reallocating larger ones to Asia trades where demand is stronger. Hapag has ended its cooperation with ACL on the Transatlantic trade, ceasing calls at Baltimore and direct service to Liverpool from USEC ports.
Space remains tight from USWC to Europe due to limited sailing options, with CMA and OOCL offering rail service via Houston as an alternative. Key West Mediterranean ports like Valencia, Algeciras, and Tanger Med are facing significant congestion due to diverted volumes, while Rotterdam and Hamburg are congested from high import volumes and sporadic strikes.
Additionally, MSC Canada is replacing its direct call at Naples with Salerno on its Med Canadian service, starting with MV MSC Tamara V.CD441R from Montreal and MV MSC Nahara V.CD440A from Halifax.
U.S.–LATAM
Schedule reliability to East Coast South America (ECSA) ports is severely impacted by congestion at southern Brazil ports like Navegantes and Rio Grande, exacerbated by heavy rains. Carriers are omitting these ports and transshipping via Santos, causing congestion to spread to Itapoa and Paranaguá.
Space from USGC to ECSA and WCSA is tight due to delays at transshipment ports and southern Brazil ports. Increased transshipment cargo is causing congestion at Panama, Caucedo, Cartagena, and Kingston ports. Additionally, MSC/Hapag and Maersk have extended their suspension of services to Navegantes and Salvador until mid-December 2024, and CMA and COSCO have shifted their BRAZEX service from Navegantes to Imbituba.
U.S.–South Asia, Middle East, Africa (SAMA)
Monthly rate increases to the Middle East are driven by service instability and tight vessel space. Space from USEC and USGC ports to India and Middle East (ME) trades is significantly impacted by piracy risks in the Suez Canal, leading carriers to divert via the Cape of Good Hope, increasing transit times and blank sailings.
Services to Red Sea ports are mostly suspended, with remaining services causing congestion at West Med hubs. Limited service to Persian Gulf ports continues, with Jebel Ali port omissions since January 2024.
Congestion at SE Asia and Jebel Ali ports is pushing carriers to use alternative hubs like Abu Dhabi, Mundra, and Colombo, which are now also congested.
U.S.–Oceania
Due to ongoing congestion and operational issues at Charleston port, Hapag, MSC, and Maersk have shifted their direct service to Savannah but will return to Charleston at the end of October 2024.
Vessel space to Oceania is tightening as we enter peak season, with CMA and ANL announcing GRIs for November 2024. Carriers with transshipment services via Asia into Oceania are primarily routing through the Panama Canal, which is nearly back to normal daily transits.
Additionally, brown marmorated stink bug (BMSB) season is in effect, requiring fumigation for applicable cargo from North America.
Canada
Dock workers at the Port of Montréal have launched an indefinite strike as of October 31, 2024, shutting down the Viau and Maisonneuve terminals, which handle 40% of the port’s container capacity. Nearly 1,200 longshore workers are protesting current scheduling practices that they contend harm work-life balance and are demanding a pay raise similar to what their counterparts in Halifax and Vancouver received. The Maritime Employers Association insists that scheduling changes require formal negotiations. This strike follows a series of partial strikes and work stoppages earlier in the month.
The surge from the August rail strike has normalized, but seasonal freight moves cause occasional tightness. Diwali (October 31-November 1) is causing slight tightness in southbound freight to the United States as many South Asian drivers take time off. The holiday season is approaching, and bookings and estimated transit times should be made while being aware of Remembrance Day (November 11) as well as U.S. Thanksgiving (November 28).
South America
LATAM
Intra-Americas services are struggling with space, requiring bookings six weeks in advance, while services to Asia are fully booked four weeks out due to the cotton season.
Southern ports are experiencing several omissions due to congestion, with Santos being the most reliable but still impacted. Equipment shortages, especially for 20' containers, persist across the coast, exacerbated by Panama Canal congestion.
Paranaguá and Itapoa ports are struggling with infrastructure issues, reducing the time shippers have to load and deliver containers from seven days to just 2–3 days.
In Manaus, the Negro River water levels are dropping earlier than usual, reaching their lowest in October instead of November. Bookings have outstripped capacity in all trades until early November, with availability only at base ports in the United States, Central America, the Caribbean, and Asia. Transshipment ports in Panama and Mexico face 2-4 week delays due to congestion. Rollovers, omissions, departure delays, and rough waters in Chile are causing further disruptions.
Port congestion in major hubs in Asia and Central America continues to impact schedules significantly, with bookings now required four weeks in advance. In Colombia, there is a shortage of 20' equipment in Bogota, Medellin, and Cali, with space reductions to the United States and weight restrictions of 20 tons per container.
Peru’s port of Callao is highly congested, with carriers refusing heavy cargo like tiles and not accepting cargo to Central America due to transshipment port congestion.
Chile is facing delays to the United States, Asia, and Europe, with space reductions for refrigerated cargo and capacity at 95–98% for vessels to these destinations, along with weight restrictions of 21 tons per container.