- The ILA-USMX tentative agreement prevents a strike at US East Coast and Gulf ports, securing jobs while allowing for semi-automated operations.
- Transpacific ocean rates remain stable as pre-Lunar New Year demand surges, but Asia-Europe rates are showing signs of easing.
- Despite potential disruptions from the Los Angeles fires, there are no major logistics impacts so far, though future rebuilding efforts may affect container volumes.
The shipping industry saw key developments last week, with the announcement of a tentative agreement between the ILA and USMX, ending the strike threat at US East Coast and Gulf ports. Meanwhile, rates in both ocean and air cargo segments have fluctuated, driven by Lunar New Year demand, frontloading ahead of expected US tariffs, and logistics challenges stemming from recent fires in Los Angeles. This article explores the latest market trends and insights shaping the freight industry, reports AJOT.
Labor Agreement Ends Strike Threat
Last week, the ILA and USMX reached a tentative agreement that removed the strike threat at US East Coast and Gulf ports. This deal secures jobs for workers while allowing semi-automated operations to improve port efficiency.
Full automation will be blocked, but new technologies will be introduced with the condition that they create more jobs rather than eliminate them. This agreement appears to be a win for the union while allowing the USMX to implement technological advancements to enhance port operations.
Transpacific and Asia-Europe Rate Trends
Transpacific ocean rates have remained level after a surge at the start of January due to pre-Lunar New Year demand.
Rates for the Asia-US West Coast climbed by 52%, reaching $6,000/FEU, while East Coast rates rose by 30%, hitting around $7,000/FEU.
Asia-Europe rates had also surged earlier than usual in December, but are showing signs of easing, with some carriers planning to reduce rates to $4,000/FEU after the holiday rush. As Lunar New Year demand wanes, Asia-Europe prices may drop to pre-crisis levels.
US Tariff Concerns and Frontloading Impact
Frontloading in anticipation of possible US tariff increases has kept North American container volumes elevated, with January volumes projected to rise by 10% compared to last year.
This frontloading has helped sustain ocean rates, but once the Lunar New Year demand subsides, rates may decrease. However, frontloading could keep volumes higher than usual for Q1, mitigating the effects of any rate drops.
Impact of Los Angeles Fires on Logistics
The fires in Los Angeles have not caused significant disruptions to logistics or container ports so far.
Although the fires are not directly impacting port operations, the eventual rebuilding effort could lead to increased demand for construction materials, similar to the spike in ocean volumes seen in Turkey after the 2023 earthquake.
Future rebuilding activities could eventually affect container volumes and shipping rates.
Air Cargo Rate Changes
Air cargo rates have eased from their December peak but remain higher than usual due to strong e-commerce demand.
Transatlantic air rates fell by 33% from December, but at $2.12/kg, they are still 17% higher than the same period last year and 32% above low-demand season rates.
This price discrepancy reflects the ongoing capacity challenges in air freight, leading to shifts in freighter allocations.
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Source: AJOT
