Rebuilding efforts in California following the devastating Los Angeles (LA) fires are expected to impact container volumes, according to a new analysis by Freightos.

Judah Levine, head of research at Freightos, stated that while there has been no reported disruption in supply chains to date, the subsequent rebuilding efforts could affect cargo volumes in the area, home to some of North America's busiest cargo hubs.

"So far, there are no reports of significant logistics disruptions resulting from the devastating fires in Los Angeles, and container ports are far enough away from the blazes that they have been unaffected," Levine said.

"The scope of the future rebuilding effort could eventually impact container volumes as construction material imports increase, which was one factor in elevated ocean volumes and rates into Turkey following the earthquake in 2023," he added.

US East, Gulf ports strike averted, rates remain high

Meanwhile, the Freightos head of research noted that shippers who rely on US East Coast and Gulf ports were able to breathe a sigh of relief last Wednesday night when the ILA and USMX announced a tentative agreement for a new six-year contract, ending the strike threat and extending the existing contract.

Levine pointed out that the sides had appeared far apart on the role of port automation, with the USMX seeking the introduction of technologies to make the ports more efficient, and the union rejecting even semi-automated operations that could eliminate jobs.

But secret meetings yielded language for a compromise that ultimately led to the Wednesday night of a tentative deal announcement.

He noted that details of the agreement are being withheld during ratification, but the joint statement explained that the agreement will protect current jobs and establish a framework for implementing technologies that will create more jobs and modernize the ports. 

"The WSJ reports that the new deal will bar full automation from ILA ports, and will detail processes for how new technologies will be implemented without reducing union headcounts. It reportedly will allow operations at ports which already have multiple semi-autonomous cranes operated by a single worker to remain unchanged, while terminals adding new semi-autonomous cranes will be required to hire one union worker for each new crane," Levine said.

He added that these terms look like a win for the ILA by preventing both the introduction of full automation and the loss of jobs when semi-automation is introduced, while the USMX gains the right to introduce tech to improve efficiency – including better yard density – via the compromise, though without realizing the full cost reductions that automation otherwise might bring.

"Frontloading ahead of the possible January strike had helped keep North America container rates elevated into November but were no longer a driver of rates as the strike deadline got closer," Levine said.

He added that though transpacific prices to both coasts were level last week, rates had climbed sharply to start the month as demand is increasing ahead of the Lunar New Year holiday which starts January 29th.

Asia - West Coast prices climbed 52% compared to late December up to the US$6,000/FEU level, with East Coast rates at about US$7,000/FEU for a 30% gain. 

For Asia-Europe and Mediterranean shippers, LNY demand started earlier than usual this year due to longer lead times from Red Sea diversions and rates that had increased about 60% from early November into December to about the US$5,500/FEU level have been stable since then, with daily rates this week already starting to ease. 

Asia-Europe prices, on the other hand, may soon fall back to the Red Sea crisis-era floor of US$3,000-US$4,000/FEU hit in the low demand periods last year.

"But transpacific rates may not recede as significantly once LNY demand eases, since frontloading ahead of expected US tariff increases may be keeping volumes higher than they otherwise would be in Q1, with the NRF projecting a 10% increase in January volumes compared to last year," Levine said.

Meanwhile, air cargo rates continued to ease from their December peak season bump but remain well above slow-season norms as e-commerce volumes keep demand for capacity strong.

Freightos Air Index data show transatlantic rates have fallen 33% from their December peak, suggesting some peak season volumes were routed through Europe this year.

However, the report noted that at US$2.12/kg, the current rate is still 17% higher than a year ago and 32% higher than during low-demand periods last year.

Levine said this possibly reflects the continued capacity deficit on this lane, resulting in shifts of freighters to the Pacific.