Significant volatility in international freight rates: International freight insights APAC January 2025
- levyjeffrey
- Jan 8
- 9 min read
Updated: May 4
There was significant volatility in ocean freight rates in December 2024. Access ZG’s indicators from Asia freight forwarders are that spot ocean freight rates offered by some carriers to Australia increased by up to 20%, following November’s declines. However early January 2025 is showing declines of up to 31% compared to late December. These December international ocean freight observations don’t match the index results stated below. This is due to rate volatility and the index lagging the information Access ZG sees in both other metrics and on the ground with Asia freight forwarder and shipping line quoted rates.
The China Containerized Freight Index (which is the best index for spot ocean freight between Asia and Australia) showed spot ocean freight rates China to Australia decreased 12% over the past December month (rates finished up 52% for 2024 year). Rates for China to all global routes increased 4% over December 2024 (up 64% for 2024 year). Here’s a year-to-date chart comparing ex China to Australia & New Zealand ocean rates (green), with ex China to South East Asia and all global rates ex China.
The next few weeks leading up to Chinese New Year are likely to remain volatile as there’s seasonal increased demand but offsetting this is a February 2025 break up of the biggest shipping line alliance with subsequent competition for market share. Post Chinese New Year may see the seasonal decline in rates. Chinese New Year is a bit earlier this year and falls on 29 January 2025.
The container shipping futures market ex China which is available for market trading only for Asia to Europe route is showing an up to 40% decline China to Europe in the next few months. Can’t read too much into this from an Australia perspective as Europe trade lane has very high pricing at the moment due to an inability to use Suez Canal. Futures markets as well as indices ex Asia have been super volatile over the past few weeks.
Airfreight rates on key trade lanes out of Hong Kong reached an annual high in December as demand hit peak levels. TAC data, showed that average global rates – a combination of both spot and contract – were up 8.5% in December 2024 compared with November levels. Intra-Asia rates were marginally higher for the month.
Reply to arrange a no obligation discussion via your choice of phone call, Zoom online or face to face (for those based in Sydney). and see below for December 2024 high value article highlights:
Australian ports face industrial action
The Maritime Union of Australia’s dispute with Qube Ports is set to disrupt Australian ports by Christmas due to stalled negotiations. The Maritime Union of Australia (MUA) has been in a deadlocked bargaining dispute with Qube Ports since April 2024, with industrial action expected to affect 10 Australian ports by Christmas. The dispute centres around the MUA’s accusations that Qube has deliberately delayed negotiations.
workers’ frustration.
Carriers plan for new US east coast port strike as contract deadline looms
Negotiations between the dock workers’ International Longshoremen’s Association (ILA) and port employers the United States Maritime Alliance (USMX) now have a very short window to produce a new master contract before a new strike, forcing box lines to mitigate the impact. The current master contract between workers and employers on US east and Gulf coast ports will expire on 15 January and, if no new agreement is reached by then, a coast-wide strike on 16 January is expected.
Negotiations have made no progress since September when the parties agreed on wages – a 62% increase. Automation remains the major impasse between the longshoremen and their employers. The USMX argues that increased automation is essential for productivity, while the ILA argues it will reduce the availability of human jobs.
Bumpy rates in 2025 amid alliance resets and ongoing Red Sea challenges
The seasonal drop in container freight rates after Chinese New Year 2025 could be greater than in previous years, as it coincides with the reshuffling of container shipping alliances in February 2025, according to shipping guru Lars Jensen. Writing in this month’s Baltic Exchange market report, Jensen, CEO of Vespucci Maritime, explained that this is because carriers might prioritise the phase-in of vessels over seasonal blank sailings, and continue fighting for market share during the transition.
Mainline operators still in five-year extraordinary profit cycle, thanks to Red Sea crisis
Alphaliner’s report says that 2024 is on track to be the third most lucrative year in container shipping history despite the higher costs borne by container carriers to divert tonnage around the Cape of Good Hope.
Yang Ming eyes higher contract rates, with a 'focus on the transpacific'
Yang Ming management expects oversupply concerns to ease this year as detours round the Cape of Good Hope continue. The gap between container shipping supply and demand was 8% in 2024, and is expected to narrow to 4% in 2025, added the carrier.
CCO Kevin Lee added that, with freight rates being higher year on year and with high port handling costs, Yang Ming was optimistic about negotiating higher contract shipping rates this year. He said: “The supply of shipping capacity is still greater than the demand. However, due to factors such as the geopolitical Red Sea crisis and the route detour strategy maintained, coupled with the risk of strikes in the eastern United States and continued supply chain disruptions, the direction for freight rates is difficult to predict.
“In Q4 24, they increased compared with the fourth quarter in previous years. We will be cautiously optimistic and closely observe this year.” He continued: “Due to the higher freight rates in 2024, the contract rates in 2025 are estimated to be higher, but the official decision will not be made until March or April.”
Transpacific rate rebound gives box lines upper hand in contract negotiations
Transpacific rates have shot up ahead of an increasingly likely industrial action by US East Coast port workers. This will give mainline operators bargaining power when discussing 2025 contract rates, according to Linerlytica’s report. Transpacific spot rates to the US West Coast rebounded sharply last week, with the Shanghai Containerised Freight Index (SCFI) gaining nearly 22% after falling for the previous three weeks.
Frontloading continues to put pressure on Transpacific rates
Transpacific ocean rates increased slightly last week and are about 15% higher than at the start of December on successful mid-month General Rate Increases (GRIs). Rate increases and reports of full vessels this far ahead of the Lunar New Year probably reflect shippers continuing to pull forward volumes ahead of President-elect Trump’s promises of tariff increases next year – with Trump this week proposing the US should reclaim the Panama Canal in response to growing Chinese influence there. Carriers are hoping the addition of pre-LNY demand in January will support further rate hikes to start the new year on GRIs of US$1,000 – US$3,000/FEU.
Strong gains on the transpacific as US imports swell and GRIs begin to bite
Container spot freight rates on the key transpacific eastbound trade have started 2025 with strong gains, following the partial implementation of 1 January general rate increases (GRIs) and ongoing healthy demand. Alphaliner noted in this week’s commentary: “These rate gains could also be related to the impending labour strikes on the US east and Gulf coasts and to the fear of increased US import dues under the new Trump administration”.
Vessel deliveries set to outpace growth in new year
Deliveries of new ships will double the excess capacity after Red Sea diversions have absorbed the vast swathe of new tonnage delivered this year, following the Houthi’s attacks on shipping passing close to its coasts. Shipbroker Braemar’s latest market report acknowledged that the broker had expected excess capacity to reach 12-13% this year, up from around 9% in 2023, but the Middle East conflict and subsequent diversions saw those projections undermined.
Air cargo rates rise to a 2024 high
Worldwide air cargo rates rose to a 2024 high in November of US$2.76 per kilo, despite a slight (-2 percent) drop in flown tonnages compared with October, although demand and pricing both remain significantly above their already elevated levels last November, according to the latest figures and analysis by WorldACD Market data.
The figures reflect worldwide air cargo markets that remain relatively strong, including ex-Asia Pacific, but where good advance planning by air cargo stakeholders looks set to avert a major peak season capacity crunch and very steep rate rises in the final weeks of the year. But overall global tonnages in November were down -2 percent, MoM.
https://aircargoweek.com/air-cargo-rates-rise-to-a-2024-high/ mc_cid=25ce360250&mc_eid=0f5a026062
Growing demand could see shippers’ air cargo spend rise in 2025
In an air cargo market outlook report, Xeneta chief airfreight officers Niall van de Vouw and airfreight analyst Wenwen Zhang predict that air cargo demand will rise by 4-6% next year while capacity will increase by 3-4%. Zhang said: “It is unlikely that the tight airfreight market of 2024 will ease in 2025…” The report added: “We are entering an area with unpredictable turbulence. The best approach to a period of high uncertainty is to be alert to quantitative signals from the marketplace as it could avoid shippers over-reacting and creating a vicious circle of escalating rates.”
As a result of demand growing faster than supply, airfreight rates are likely to remain elevated in 2025, although this will vary from trade lane to trade lane. Last week, IATA predicted that air cargo volumes would increase by 5.8% next year.
Trump’s plans and what we can do to secure supply
The political landscape is shifting with Donald Trump’s recent election, which could significantly change trade flows and disrupt global supply chains. The anticipated policies of the Trump administration raise questions about trade dynamics, the resilience of supply chains, the future competitiveness of the US, the position of Europe and other US allies, and the security of supply.
The following is recommended:
Ongoing strategic reflections- Despite proactive measures, certain factors remain unpredictable.
Opportunities and threats- The evolving political landscape presents both challenges and opportunities for supply chains. Companies can enhance their resilience and adaptability by adopting scenario planning and leveraging advanced visibility tools. Collaboration is another critical resilience factor. With proactive measures in place, productive relations with partners, and continuous strategic discussions, businesses can navigate uncertainties while improving competitiveness in a dynamic market environment.
Trump will have a 'heavy impact on container volumes', warns Wan Hai chief
US president-elect Donald Trump’s policies will have a heavy impact on container volumes and supply chains, said Wan Hai Lines’ general manager Tommy Hsieh yesterday, as the Taiwanese carrier prepared for “another strong year”. Firstly, Mr Trump’s announcement of tariffs on imports from Mexico, Canada and China has already caused a rush to front-load goods before the tariffs come into effect. Secondly, he has voiced his support for the International Longshoremen’s Association’s objection to automate operations in US east coast ports… These factors mean that freight rates are unlikely to see huge downward pressure in 2025, as the deployment of large ships will keep ports congested and vessel-routing round the Cape of Good Hope is likely to continue.
'Strap in for 2025'
A bit of boring but valuable, straight reporting today as a rather eventful 2024 draws to a close, thankfully. As the US markets collapse following rather hawkish guidance from the Federal Reserve (more on this in our separate ’Wednesday Bloody Wednesday’ coverage) on rates, in a note* out to investor today, Bernstein analysts warned: “Don’t expect calm in 2025.”
Geopolitical Risk Outlook: Maritime Industry Faces Tumultuous Future
As the global landscape becomes increasingly fragmented into distinct trading blocks, the maritime industry finds itself at a crucial crossroads, grappling with a myriad of challenges that could shape its future for years to come. A recent poll conducted by Lloyd’s List reveals that 47% of industry insiders view geopolitical risk as the most significant threat to shipping over the next two years.
Cape of Good Hope detours look set to continue until 'August, at least'
The impending network changes made by the big container lines look set to ensure continuation of services around the Cape of Good Hope until the latter half of 2025. CEO and partner at Vespucci Maritime Lars Jensen told The Loadstar resumption of services through the Suez Canal would involve further network changes, and he questioned whether carriers would be willing to make these before August, “at least”.
“Shipping lines are set to phase-in their new networks over the course of February and March, and this means reliability during this period will be all over the place,” he said. “However, the moment they decide to go through the Red Sea again, they will have to change their networks, I do not see a scenario in which they are going to be happy, having done this in February, to be required to do it again in April or May.” Mr Jensen speculated that even if the Red Sea Crisis was resolved, the diversion of ships around the Cape would likely remain in place for a further six months.
MSC adds Australian port call to Koala service
Swiss/Italian ocean carrier MSC has announced a new direct call at Adelaide port on its Koala service, which connects China, Australia and Indonesia. MSC Sijing will be deployed on the first sailing of the following updated port rotation with an estimated time of departure from Shanghai on 18 December:
Shanghai (China) – Hong Kong – Jakarta (Indonesia) – Fremantle (Australia) – Adelaide (Australia) – Shanghai.
WiseTech Global takes over Australian GTM solution provider
WiseTech Global, developer of the CargoWise logistics platform, has announced an agreement to acquire BSM Global, an Australian-based provider of global trade management (GTM) solutions.
Pilbara Ports Authority records throughput increase in November
In November 2024, the Pilbara Ports Authority reported a total monthly throughput of 67 million tonnes (Mt), reflecting a 9% increase compared to November 2023.
Access ZG (access-zg.com) provides services to international logistics & trade participants, specialising in connecting with Asian markets.
Thanks for taking the time to read and hope you gained some valuable insights,
Jeffrey Levy CA
Founder
ACCESS ZG
_______________________________
Web: access-zg.com
Email: jeff@access-zg.com
Phone: 0417 275 262
+86 18813902084
WhatsApp: +61 417 275 262
WeChat: Jiefu888Jeff
Comments