Shipping trends and developments in December 2024
U.S. President-elect Trump has come out in support of the ILA as regards their stance on automation at container terminals. The current contract extension expires on 15 January – 5 days before the inauguration of the President-elect. The ILA/USMX negotiations broke down recently over automation and have not restarted in any positive manner.
Trump has pledged to immediately impose a 25% tariff on Mexican and Canadian imports and increase tariffs on Chinese goods by an additional 10%. While campaigning, he also announced to levy a 10% to 20% tax on all imports and increase tariffs on Chinese goods by at least 60%.
Trump has also announced intentions to take back operational control over Panama Canal to reduce passage costs. The USA controlled the canal until 1999.
The WTO Director-General's annual overview of global trade developments shows a sharp rise in the coverage of trade-restrictive measures by WTO members between mid-October 2023 and mid-October 2024, compared to the last Trade Monitoring Report in November 2023. While the report, presented at an 11 December meeting of the Trade Policy Review Body, also points to WTO members’ introduction of a substantial number of trade-facilitating measures, there is increasing evidence of inward-looking trade policies which could generate further uncertainty for the world economy.
Houthi attacks on vessels continue with the U.S. Central Command (CENTCOM) reported that destroyers had protected three U.S. flag merchant vessels, between 30 November and 1 December.
Energy price - December 2024
OPEC+ has postponed production hikes to April 2025, maintaining significant output cuts to support prices. However, a supply surplus of 950,000 bpd is anticipated in 2025, with non-OPEC+ nations like the U.S., Brazil and Guyana leading production growth. These shifts underscore the balancing act between stabilizing prices and managing market share.
17 November 2024 = USD73.01
17 December 2024 = USD73.86
Global oil markets face a surplus of more than 1 million barrels a day next year as Chinese demand continues to falter, cushioning prices against turmoil in the Middle East and beyond, the International Energy Agency said. Oil consumption in China has contracted for six straight months through September and will grow this year at just 10% of the rate seen in 2023, the IEA said in a monthly report on Thursday.
Global aggregate electricity demand is set to increase by 6,750 terawatt-hours (TWh) by 2030, per the IEA’s Stated Policies Scenario. This is spurred by several factors including digitalization, economic growth, electric vehicles, air conditioners, and the rising importance of electricity-intensive manufacturing. In large economies such as the U.S., China, and the EU, data centers contribute around 2 to 4 percent of total electricity consumption at present.
KEY SHIPPING TRENDS PER REGION
Europe
GENERAL
- Rerouting via COGH due to the Red Sea Crisis continues to impact operations
- Maersk and Hapag Lloyd selected London Gateway as the most optimal port to serve our customers importing/exporting cargo to/from the UK → more port calls
- When the Network of the Future (see slide 9) launches in February 2025, London Gateway will replace Felixstowe on Asia – Europe services
MAIN REASONS FOR BOTTLENECKS
- Chinese New Year period will have a significant impact on global shipping due to factory closures and a sharp decline in production.
- In 2025, Lunar New Year begins on 29 January, but many businesses start their preparations early and reduce production up to three weeks in advance; normal production levels are expected to return by the second/third week of February
- Typically, businesses face a race to get cargo out of China before operations wind down and celebrations begin → space fill be limited
- Adjustment in schedules in light of adjusted terminal operating hours and reduced workforce availability in the holiday period
- Harsh weather in Europe (strong winds, etc)
IMPACT ON FREIGHT RATES
- Rates continue to increase particularly on the spot market
- Import and export rates to/from Asia continue to increase
- Further ETS surcharges (see slide 10) as from 2025 will lead to rate increases
OUTLOOK
- Carrier reliability remains unstable
- Shippers need to continue to plan and book ahead
Asia
GENERAL
- We see the Asian shipping industry to be stabilizing as overall demand aligns with the available capacity
- Asian region has seen a bumpy recovery, with China’s economic decline affecting global trade volumes
- Southeast Asia remains a key driver of growth due to increased manufacturing activities and diversification of supply chain
- Announced tariffs from the US will impact trade and freight rates immensely
MAIN REASONS FOR BOTTLENECKS
- Typhoon and weather disruptions in North Asia in the beginning of Q4 that has caused some temporary congestion
- Longer transit times via COGH will become a norm into 2025
- While global shipping capacity has increased, demand on certain trade lanes such as Asia-Europe exceeds supply. Weekly capacity reductions on key lanes have heightened competition for space and this can be especially the case during peak seasons
IMPACT ON FREIGHT RATES
- Freight rates in Asia have experienced fluctuations in 2024 where rates were seen higher year-on-year due to the imbalances of demand and supply. Over-capacity in container shipping and improved port operations handling have somehow helped in stabilizing freight rates.
- However, we need to know that regional trade variation persists. Though the current freight rates are stabilizing, we should expect that they remain vulnerable to surges during peak seasons or due to sudden disruptions
OUTLOOK
- East and Southeast Asia are expected to see moderate growth in trade volumes as economic activities continue to recover in some sectors.
- Subject to geopolitical uncertainties and impacts, we might see stable yet high freight rates. This is also due to operational trends such as more push on greener shipping initiatives and enhanced supply chain resilience.
- On the other hand, we may face persistent geopolitical risks, such as territorial disputes in the South China Sea, trade sanctions and retaliatory tariffs. These could disrupt shipping routes resulting in increased transit times and costs.
North America
GENERAL
- U.S. manufacturers are stockpiling imported parts and raw materials in anticipation of President-elect Donald Trump imposing new tariffs next year. Trump has vowed to impose new rounds of tariffs soon after taking office on 20 January. He has suggested tariffs of 25% on all imports from Mexico and Canada, and tariffs of up to 60% or more on certain goods from China.
- The president-elect has announced to introduce 60% tariffs on goods imported from China and a 10% to 20% tariff on goods imported from all other trading partners. At present, 14% of goods imports come from China and a total of 38% of all goods imports come from countries without a trade agreement.
MAIN REASONS FOR BOTTLENECKS
- The looming threat of a potential East Coast and Gulf Coast port strike in January 2025, combined with President-elect Trump’s proposed tariff increases, has sparked a surge in import volumes at U.S. container ports, according to the National Retail Federation (NRF).
IMPACT ON FREIGHT RATES
- Container freight rates oscillated dramatically between January 2023 and November 2024. Freight rates slumped to their lowest level on 26 October 2023, when the going rate for a 40ft container was only 1,342 US$. Since then, the global freight rate has significantly increased, hitting over 5,900 US$ in July 2024, the highest value on record. As of 28 November 2024, freight rates decreased to 3,331 US$ per 40ft container.
OUTLOOK
- The Xeneta Ocean Market Outlook 2025 predicts that, similar to 2024, the transportation of ocean containers will be difficult in 2025.
South America
GENERAL
- The strike by Brazilian Federal Revenue Auditors that began on 26 November has intensified, mainly impacting queues at the borders. Automatic clearances by the revenue system remain unaffected to date
- On 14 November, the Port of Chancay was inaugurated in Peru. The port's maximum depth is 17.8 meters, allowing it to accommodate ultra-large container ships with a capacity of up to 18,000 TEUs, located about 80km from Lima, the inauguration was attended by Chinese President Xi Jinping
MAIN REASONS FOR BOTTLENECKS
- Traffic restrictions from 18 December 2024 to 17 January 2025 for special cargo (overweight and oversize cargo) on the highways providing access to the Port of Santos, combined with the peak season and lack of investment in infrastructure, are impacting delays in the reception of cargo by port terminals due to lack of space, especially at the Ecoporto Terminal, which is the main terminal for project cargo operations on the right bank of the Port of Santos, where cargo is only being received very close to the ships' operating date. These road transport restrictions on access to the Port of Santos during this period impacted both special export and import cargo.
IMPACT ON FREIGHT RATES
- Maersk is revising the Peak Season Surcharge (PSS) to 2,000 USD per container, applicable to all Reefer cargoes from Peru to Europe, India & Middle East, effective 30 December 2024.
OUTLOOK
- Stable, but disruption likely anytime
SPECIAL: MAERSK ANNOUNCES “NETWORK OF THE FUTURE”
- Will go live on 1 February 2025
- Reduction of network complexity with single operator loops
- Less port calls per service
- Incorporation of terminal which are most productive and operationally efficient
- Network will comprise 29 ocean mainliner service and shuttle services
- Network will cover Asia/US West Coast, Asia/US East Coast, Asia/Middle East, Asia/Mediterranean, Asia/North Europe, Middle East – India/Europe and Transatlantic trade scopes
- Cape of Good Hope network for the commencement of the Gemini Cooperation between Hapag Lloyd and Maersk will be phased in as disruptions in the Red Sea persist
ETS SURCHARGES AS FROM 2025 AND ONWARDS
IMPLEMENTATION OF DIRECTIVE (EU) 2023/959 AND FUEL EU MARITIME REGULATION
Shipping lines have started to announce updated/increased ETS surcharges and BAFs applicable as from 1 January 2025
European Directive (EU) 2023/959 mandates the application of the 70% phase-in of the ETS, increasing the phase-in requirement from 40% to 70%. This directive requires all shipping companies to offset their emissions by purchasing EUA allowances.
Furthermore, starting from 1 January 2025, the Fuel EU Maritime Regulation will come into effect. This regulation establishes the following limits on the greenhouse gas (GHG) intensity of maritime fuels for all vessels exceeding 5,000 GT that call at least one European port:
- -2%: effective from 1 January 2025
- -6%: effective from 1 January 2030
- -14.5%: effective from 1 January 2035
- -31%: effective from 1 January 2040
- -62%: effective from 1 January 2045
- -80%: effective from 1 January 2050
This will require all shipping companies to adopt alternative fuels to progressively reduce the carbon intensity of maritime fuels, with increasingly stringent targets set until 2050.
Surcharges vary from shipping line to shipping line and will continue to be included directly in the rates. Please speak to your local Bertling Office for guidance.
Customer advice
Considering the ever-changing market conditions and forces, please:
- Think ahead and book well in advance. Try to plan for 6 months ++.
- Consider that the market can change significantly. Further disruptions can happen anytime.
- Identify contract options that enable flexibility and resilience for your business.
However, it is our job at Bertling to keep global supply moving and do all we can and apply our knowledge, network and expertise to protect our clients’ while taking the latest market developments into account. We are there to find the best solutions to ensure cargo flows.
