As 2024 draws to a close, the U.S. import market is experiencing significant shifts-
Ocean Freight: Stability in rates marks a departure from the turbulence of recent years. Yet, shippers are treading cautiously with capacity recalibrations and looming global economic uncertainties.
Air Freight: E-commerce trends and supply chain realignments continue to drive demand volatility, though resilience is emerging in key trade lanes.
2025 Outlook: Looking ahead, the potential for new policy directions under the incoming administration in 2025 may signal fresh changes for the global logistics landscape.
US-flag vessels to handle up to 10% of US imports from China
A new bipartisan bill, the SHIPS for America Act, aims to bolster U.S. maritime capabilities by requiring at least 10% of seagoing imports from China to be transported on U.S.-built, U.S.-registered, and American-crewed ships starting in 2029.
The legislation, introduced by Sen. Mark Kelly, seeks to strengthen domestic shipbuilding, enhance workforce development, and reduce reliance on foreign vessels. Currently, fewer than 200 oceangoing merchant vessels are U.S.-flagged, while China dominates global shipbuilding with nearly a third of the market.
The bill also proposes expanding the U.S.-flagged fleet to 250 ships within a decade, increasing government cargo transport requirements on U.S. vessels from 50% to 100%, and granting berthing preference to U.S. ships at ports. Additionally, it includes the establishment of a maritime security czar and a trust fund to reinvest shipping fees into security and infrastructure, aiming to address operational and cost challenges posed to logistics providers and Chinese carriers.
Panama Canal Under Scrutiny
President-elect Donald Trump has criticized Panama’s management of the Panama Canal, calling the tolls “exorbitant” and unfair to U.S. interests. On Truth Social, Trump suggested potential actions, including the canal’s return to U.S. control if Panama fails to uphold the principles of its transfer.
The Panama Canal, vital to U.S. trade with 70% of its traffic tied to the United States, faces operational challenges from toll hikes and climate-driven droughts that have restricted vessel drafts. Trump’s remarks also reflect concerns about China’s increasing influence in Panama through its Belt and Road Initiative, which has alarmed U.S. officials.
Maritime experts view Trump’s stance as a signal of his administration’s intent to safeguard critical trade chokepoints and maritime interests, adding to the complexities already facing the shipping industry.
Excess Capacity Pushes Rates Lower on India-US Trade Lane
Overcapacity on the India-US trade lane is driving further declines in ocean freight rates, as carriers struggle to sustain pricing amidst a significant increase in capacity since the pandemic.
Spot rates from West India to the US East Coast have fallen approximately 20% since late November, continuing a downward trend from their late-July peak.
Efforts to implement rate hikes, including peak season surcharges and general rate increases, have largely been abandoned, with carriers delaying such measures through the end of the year to retain customer support.
Rising Transpacific Rates Strengthen Ocean Carriers' Position in Contract Talks
Transpacific spot rates surged significantly on December 15th as carriers capitalized on market fears, pushing through substantial General Rate Increases (GRIs). Several major carriers have already filed their January 1 GRIs with the FMC:
- Cosco, Evergreen, Hapag-Lloyd, HMM, and Yang Ming aim for $3,000 per 40ft container.
- CMA CGM and Zim are set to impose $2,000 per 40ft.
- ONE is targeting $1,000 per 40ft.
While December is traditionally a slow month for shipping due to pre-holiday stocking, strong import volumes continue amid concerns over potential Trump tariffs, an anticipated East and Gulf Coast port strike in January, and early factory closures for Chinese New Year.
These disruptions, coupled with shipper anxiety over shortages or delays, have allowed ocean carriers to gain leverage. Although higher spot rates often influence contract negotiations, the relationship is not straightforward, as spot rates are more reactive to short-term disruptions. While an increase in transpacific contract rates is possible, outcomes remain uncertain and dependent on broader market dynamics.
What’s Next?
2024 has been a balancing act between resilience and adaptation. As we step into 2025, industry stakeholders must brace for policy-driven shifts, capacity adjustments, and geopolitical challenges.
