Incoming US President Donald Trump's recent explicit backing of the International Longshoremen's Association (ILA) and its opposition to even semi-automation introductions at ports in the US East and Gulf ports may make a strike, or at least a prolonged one, much less likely to happen, according to a new Freightos analysis.
Judah Levine, head of research at Freightos said the underlying challenges of 2024 are also still present moving into 2025.
In the analysis, Freightos noted that Asia-Europe/Mediterranean container rates ticked down slightly last week, though mid-month GRIs will attempt to push rates up soon. But current rates of more than US$5,000/FEU remain very elevated.
It added that prices are 12-18% higher than at the end of November and more than 40% higher than in October due to the Red Sea diversion-driven early start to pre-Lunar New Year demand this year.
"This volume increase is combined with some bad weather in the Far East to cause congestion at some container hubs in Japan and China," Freightos said.
Transpacific rates, on the other hand, rebounded by more than 10% last week and GRIs are expected on this lane as well.
The analysis noted that even with last week's gains though, prices remain lower than at the end of November.
"But relative to Asia - Europe, transpacific rates have shown more buoyancy since the end of peak season due to frontloading ahead of a possible ILA strike on January 15th and expected tariff increases with the incoming Trump administration," Levine said.
"The pull forward for the strike is likely exhausted by now as the pre-January 15th arrival window has closed. But President-elect Trump’s recent explicit backing of the ILA and its opposition to even semi-automation introductions at these ports may make a strike, or at least a prolonged one, much less likely to happen," he said.
The Freightos head of research further noted that anticipation of tariff hikes next year is "likely still driving some unseasonal volume strength, also reflected in reports of a shortage in reefer containers."
In air cargo, Freightos cited IATA's report that global capacity reached a record high this year.
It noted, however, that with record volume strength so far this year – primarily driven by surging B2C e-commerce volumes – it also projects that constraints on capacity growth could cap volume growth next year.
"This new source of demand has kept capacity out of China tight and export rates at peak season levels throughout the year for these lanes," Levine said.
He added that recent shifts of capacity from lower-volume trades like the transatlantic to the transpacific to accommodate peak season demand – as well as the increase in shippers routing more ex-Asia, North America-bound volumes through Europe – have led to rate hikes on these routes as well.
Freightos said its Air Index transatlantic rates of US$3.03/kg last week were 88% higher than at the end of September. "But volume growth projections for next year are mostly based on expectations of continued e-commerce volume growth."
"Some stakeholders think growing opposition to this flood of low-cost goods exports from China – including a recent proposal from the EU – could curb this growth rate or even see this segment contract," Levine said.
