(Commonwealth_ DHL Global Forwarding reports stronger-than-expected demand for container shipping in the closing months of 2024, driven by rising Chinese exports and anticipated U.S. tariff increases. In its Ocean Freight Market Outlook December 2024, the company highlighted that those Chinese exports are exceeding expectations due to the impending tariff hikes pledged by incoming U.S. President Donald Trump.
Trump has committed to introducing a 25% tariff on imports from Canada and Mexico and a minimum 10% tariff increase on Chinese goods. However, how quickly these tariffs will be implemented remains uncertain. This uncertainty, coupled with heightened demand ahead of Lunar New Year and the holiday season, is bolstering container shipping demand, which is expected to remain robust until early 2025.
Niki Frank, CEO of DHL Global Forwarding Asia Pacific, noted, “Given the strong demand pulled forward this year, we were expecting consumer demand to come down significantly toward the end of the year. Yet, November volumes were similar to October and September.” He added that while the market is reacting slower than anticipated given the looming disruptions, a typical seasonal bump in demand is expected in December and January.
Although container freight rates have softened, they are still significantly higher than a year ago. According to DHL’s report, the Shanghai Containerized Freight Index (SCFI) for spot rates from Asia to Europe has increased by 255% compared to the same period last year, while rates to the U.S. West Coast have risen by 147%. However, two potential disruptions loom for container shipping in early 2025: a possible strike at U.S. East Coast ports and a major realignment of shipping alliances.
The threat of a strike at U.S. East Coast and Gulf ports remains a significant concern. Dockworkers, represented by the International Longshoremen’s Association (ILA), and employers, represented by the United States Maritime Alliance (USMX), must reach an agreement by January 15, 2025, to avoid a shutdown. This follows a three-day strike in October, and unresolved disputes over automation and semi-automation at ports have stalled negotiations. In November, the ILA walked away from talks, with Trump publicly supporting the union’s stance against increased automation.
Praveen Gregory, Senior Vice President of Ocean Freight at DHL Global Forwarding Asia Pacific, emphasized the potential impact of a strike: “East Coast ports account for almost 50% of U.S. inbound volumes. If the East Coast port is shut down, then all inbound vessels will be stuck waiting for their berthing window, which then further delays their return journey to Asian and European ports, thus disrupting capacity on key trades.”
A prolonged strike could compound disruptions as it coincides with the launch of the new Gemini Cooperation, a shipping alliance between Maersk and Hapag-Lloyd, set to begin operations in February 2025. The alliance aims to realign shipping networks to improve service levels. However, any delays caused by vessel bottlenecks at U.S. ports could hinder the alliance’s rollout.
Gregory noted that while carriers and freight services have prepared for the alliance reshuffle, unforeseen disruptions, such as strikes, could magnify operational challenges. “In ocean trade, the issues only come when anything unplanned pops up. We know this alliance reshuffle is coming. Carriers and freight services have already planned and catered to that. Shippers should expect some disruption while the new alliances bed down, but barring any exceptions, eventually we are hopeful that the new networks deliver the improved service levels carriers are promising,” he said.
Despite these challenges, DHL remains cautiously optimistic about the industry’s resilience. The company expects demand to stabilize after the Lunar New Year, though market conditions will depend on how swiftly the Trump administration implements tariff changes and resolves port disputes. The broader industry will also be closely watching the ILA-USMX negotiations and the success of the Gemini Cooperation in delivering on its promised improvements.
