- Asia-to-Europe spot rates strengthen amid robust demand and increased capacity.
- Pacific trade remains subdued, with declining rates to the US West Coast.
- Operational reliability stagnates, with 51.5% of vessels arriving on time.
- New alliance networks to launch in February 2025, causing short-term disruptions.
- Tariff announcements by President-elect Trump trigger preemptive cargo shifts.
According to the Baltic Exchange, the freight market at the close of November 2024 reflects a mixed set of developments, highlighting disparities across regions and ongoing operational challenges. While Asia-to-Europe trade displays resilience driven by demand growth and increased capacity, the Pacific routes continue to face pressure, particularly on rates to the US West Coast.
Strengthening Asia-to-Europe Trade
Spot rates for Asia-to-Europe routes are buoyant, supported by a significant increase in weekly offered capacity compared to 2023. The robust demand comes as carriers gear up for the earlier-than-usual peak season ahead of Chinese New Year, necessitated by longer sailing times around Africa.
Pacific Market Pressures
Conversely, the Pacific market remains underwhelming. Rates to the US East Coast have largely plateaued, while rates to the US West Coast continue to decline. A substantial capacity injection—25% year-on-year in early December—further exacerbates challenges in the Asia-to-US West Coast trade.
Operational Challenges Persist
Global reliability metrics remain stagnant, with only 51.5% of deep-sea vessels arriving on time in October. This marks little change from the year’s trend, which fluctuated narrowly between 51% and 56%. The upcoming alliance network reconfigurations in February 2025 are expected to keep operational improvements at bay in the near term.
Emerging Alliances and Market Turbulence
The February launch of new alliance networks, including the Gemini Corporation by Hapag-Lloyd and Maersk, is expected to disrupt services as hundreds of vessels are phased into new routes. Shippers may experience significant adjustments through March as carriers adapt to these structural changes.
US East Coast Strike Concerns
Fears of another US East Coast labor strike have prompted importers to expedite cargo bookings since mid-November. This has added pressure to East Coast spot rates and could redirect shipments to the US West Coast, further affecting pricing dynamics.
Red Sea Crisis and Routing Adjustments
Persistent instability in the Red Sea has led to continued diversions around Africa. Despite CMA CGM’s attempt to shift some services via the Suez Canal, customer resistance and ongoing attacks on merchant vessels underscore the difficulty of such changes.
Seasonal Rate Fluctuations and Long-Term Outlook
The seasonal post-Chinese New Year drop in spot rates, expected after January 29, 2025, may be steeper this year due to the alignment with alliance transitions. However, this is anticipated to be temporary, with carriers likely to stabilize rates as they settle into the new networks.
Impact of Tariff Policies
President-elect Trump’s announcement of new tariffs—25% on goods from Mexico and Canada, and 10% on Chinese goods—has triggered preemptive cargo front-loading. This development highlights the ongoing influence of geopolitical policies on global trade.
The Baltic Exchange’s November report captures the evolving dynamics of global freight, reflecting both the challenges and opportunities posed by operational shifts, geopolitical tensions, and emerging alliances in the shipping industry.
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Source: Baltic Exchange
