Market Update Q4 2024: No.13

Happy Holiday Everyone,

First, I'd like to wish everyone a fantastic Holiday Season if I have not already - I truly hope it is filled with some rest, relaxation, and the unmitigated joy that everyone who was in logistics in 2024 so thoroughly deserves. What. A. Year.

2025 - at least the first quarter of 2025 is shaping up to be nothing but absolute chaos, so it is important you get your rest - you're going to need it
As expected, the back half of December is rife with rate increases, and so is January - carriers in my opinion are front-loading these increases in anticipation of the chaos that is slated to happen (see below)

YOY growth and front-loading demand which have taken place in the last few weeks - some fun facts:

• Global container demand grew 5% year-on-year in October according to the new data from Container Trade Statistics (CTS).
• The report forecasts November’s import volume at 2.17 million TEUs, a 14.4% year-over-year increase, and December at 2.14 million TEUs, up 14.3%. Total TEU volumes for 2024 are projected at 25.6 million, marking a 14.8% rise from 2023.
• Total US imports for 2024 are now projected at 25.6 million TEUs, up 14.8% from 2023
• The NRF now expects January imports to jump 12% compared with January 2024, up from the 2.5% gain forecast last month.
• February’s imports are expected to fall 4.1% year over year, although that’s an upgrade from the 9.3% decline originally forecast.
• March volumes are expected to jump 12.7% and April by 6.6% compared with the same months in 2024

As of 12/15 the spot rates to the WC are headed up approximately $2000/40' and EC $1000-$1500, but that's only for 2 weeks and before the real increases in January come down the line

Here are the 3 things that matter:

• Potential ILA Work Disruptions Jan 15 - I stopped using my Magic 8 Ball long ago but "all signs point to yes". Check out this article:

Ocean carriers take harder line with ILA as January strike date nears

Carrier executives who dominate the board of the United States Maritime Alliance tell the Journal of Commerce they are done with what they consider to be an overly passive approach demonstrated in recent months by USMX staff in the face of repeated provocations by ILA leadership.

• Carriers are taking a hard line on automation as is the ILA
• ILA seems to also have presidential backing - or more fitting, both parties are playing politics - this was all over the news yesterday, but in case you have not seen it here is Trump's post:

"Just finished a meeting with the International Longshoremen’s Association and its President, Harold Daggett, and Executive VP, Dennis Daggett. There has been a lot of discussion about “automation” on United States docks. I’ve studied automation and knew just about everything there is to know about it. The amount of money saved is nowhere near the distress, hurt, and harm it causes for American Workers, in this case, our Longshoremen. Foreign companies have made a fortune in the U.S. by giving them access to our markets. Knowing how many families are hurt, they shouldn’t look for every penny. They’ve got record profits, and I’d rather these foreign companies spend it on the great men and women on our docks than machinery, which is expensive and will constantly have to be replaced. In the end, there’s no gain for them, and I hope they will understand how important an issue this is for me. For the great privilege of accessing our markets, these foreign companies should hire our incredible American Workers, instead of laying them off and sending those profits back to foreign countries. It is time to put AMERICA FIRST!"

Lunar New Year Jan 29

• There is usually a cargo rush in preparation for this holiday, which is expected to begin also the second week of January, in preparation for the at least 1 week and sometimes 2-week holiday.
• My personal opinion is that quite a bit of this has been front-loaded, but it won't really matter because the work stoppage and general chaos of the service changes will effectively limit supply

New Services, Consortium's Feb 1

• MSC is now a stand-alone service
• Maersk and Hapag will now share vessels
• Carriers who were sharing with either of these three companies have found new dance partners and I expect their schedules to change somewhat
• As expected, we are promised "much-improved service", "on-time performance" and better coverage overall - like anyone reading this message, I remain unconvinced but certainly hopeful for any improvement to what has been nothing less than dismal performance in all 3 categories for some time.
• Technically, all the services will improve because there is nowhere to go but up based on the last few years.

Rates are heading up in the short term, with additional capacity coming on and a demand lull in the 1Q, it will start to settle out in mid-February to March and then we'll see what's next.

Author
Matthew Crocker
CCO