The air cargo peak season this year could be more subdued than initially expected as concerns over supply chain disruptions prompted early frontloading before the traditional busy season.
Judah Levine, head of research at Freightos, said in a new analysis that air cargo peak season typically begins in November, but while rates and volumes remain strong out of Asia, the much-anticipated peak season spike in rates and difficulty in securing space — as e-commerce volumes have already been keeping space tight and rates elevated for much of the year — "so far has not materialized."
"Some forwarders think that the anticipation of this peak season chaos may have led to enough frontloading that this year’s peak will prove to be much tamer than anticipated," he added.
In ocean freight, Freightos noted that a month ago, the National Retail Federation (NRF) projected that post-peak season US ocean import volumes would continue to fall in Q4, with November's volumes decreasing 10% month-on-month and a further dip expected in December.
Meanwhile, the ILA has set a January 15 deadline for a renewed East Coast and Gulf ports strike in the absence of a new contract and the prospect of a Trump victory has heightened expectations for substantial tariff increases next year.
"The NRF's latest estimates — with projections for November volumes adjusted up by 13% and even with October and December projections increased by 6% — suggest that shippers have already started frontloading imports to get ahead of both these possible disruptions," Levine said.
He noted that this relative volume strength may explain why transpacific ocean rates, which had fallen sharply in early October, have been around the US$5,000/FEU mark since then, stabilizing well above the US$3,000 - US$4,000/FEU floor for the year reached back in April when demand eased post the Lunar New Year (LNY) rush.
And with LNY starting at the end of January this year, Levine noted that rates may face some additional pressure starting in late December or early January.
"Though there do not seem to be indications of frontloading on the transatlantic, at about US$2,600/FEU, rates have remained elevated compared to the US$2,000/FEI level seen in September and may reflect capacity reduction measures being taken by carriers," Freightos head of research added.
Canada port strike to cause further disruption
On the other hand, in Canada, Freightos noted that port operators have locked out union workers at the Port of Montreal since Sunday night following the union's rejection of a recent wage increase proposal.
The lockout has completely suspended container operations at the port, marking another escalation in this ongoing dispute, and the port authority is now calling for government intervention.
At the West Coast ports of Prince Rupert and Vancouver — Canada's largest container port and the seventh largest in North America — the local ILWU chapter of 700 workers has been locked out for more than a week.
"Though the labour minister invoked a section of the country's labour code to force the two sides to restart negotiations, talks ended quickly early this week, increasing the likelihood that carriers will start diverting vessels to Seattle-Tacoma instead of waiting out the strike offshore," Levine said.
"These disruptions in Canada are already being felt by importers and exporters that rely on those impacted ports."
"If the lockouts stretch on – especially at the larger hubs of Vancouver and Prince Rupert – backlogs at those ports will grow, and diversions to Seattle-Tacoma could lead to delays and congestion there as well," the Freightos head of research added.
Looking ahead, the analysis noted that demand will likely increase further and earlier than usual ahead of the Lunar New Year due to longer sailings avoiding the Red Sea.