The ocean freight market is evolving rapidly as key events shape the industry landscape. The U.S. East Coast labor contract is now settled, the Red Sea issue is nearing resolution, and the Lunar New Year approaches with minimal disruption. Rates are also beginning to stabilize, offering some relief to shippers. However, the reforming of carrier alliances and the potential for new U.S. tariffs present challenges ahead.

Main Concerns

  • Red Sea Reopening:
    Reports suggest the Red Sea and Suez Canal will reopen soon. This will release significant capacity as vessels can once again transit directly through the Suez Canal, cutting transit times by two weeks compared to rerouting around Africa.
  • Lunar New Year (Chinese New Year):
    The holiday begins on January 29, typically leading to a surge in shipping activity beforehand. This year, the increase has been less intense than in previous years, particularly in China. Other Asian countries celebrating Lunar New Year observe less extended holidays, contributing to a more moderate shipping rush.
  • Potential U.S. Tariffs:
    The new U.S. administration is considering additional tariffs on imports from China, potentially as early as January 20. While initial proposals included duty rates of up to 60%, these may serve as negotiating positions. Other tariff changes being discussed include:
    • A 10%–20% duty on all imports.
    • 25% tariffs on goods from Mexico and Canada, potentially effective February 1 (though a resolution may prevent implementation).
    • Increased tariffs on countries identified as having a large trade gap with the U.S.

Rates Analysis

Asia to Europe & Mediterranean

  • Red Sea Impact: The reopening of the Red Sea and Suez Canal is expected to significantly increase vessel capacity. This added supply will likely outpace demand, leading to softer rates.
  • Asia to North Europe:
    • Demand: Overall demand remains strong, and Northern European ports are still experiencing congestion.
    • Rates: Rates have dropped 10% compared to December highs and are expected to decrease further as capacity increases, particularly with the Red Sea reopening. That would free up even more capacity/supply with the reduction of current Asia transit times by more than two weeks!
  • Asia to the Mediterranean:
    • Rates have already moderated by 5%.
    • If the Red Sea reopens, the surge in available vessel capacity will likely push rates down further.

 Asia to U.S. / North America

  • Asia to U.S. East & Gulf Coasts:
    • Spot and short-term rates jumped 30% in early January due to General Rate Increases (GRIs). However, they have since flattened and are now declining slightly.
    • The resolution of U.S. East Coast labor contracts and the potential reopening of the Suez Canal are expected to drive rates down further.
  • Asia to U.S. West Coast:
    • Rates increased significantly in December (40%–45% GRIs) but have since dropped by 10%.
    • Similar to the East Coast, rates are expected to moderate further with improving capacity conditions. 

Carrier Alliance Changes

Major carrier alliance restructuring is underway, resulting in service string changes that are disrupting transit times and reliability. This period of adjustment, combined with the reopening of the Suez Canal, could lead to significant congestion as vessels rerouted around Africa meet those that transit through the Suez at the same destination ports. It may take up to two months for these disruptions to stabilize.

Managing Your Logistics

In this dynamic environment, staying informed and proactive is essential. Knowing where your cargo is, when it’s scheduled to sail or arrive, and being alerted to potential disruptions are critical to maintaining smooth operations.

This is where having the right logistics partner becomes invaluable. WOWL specializes in linking critical data elements from service providers, brokers, agents, carriers, forwarders, and ports. We synthesize this data into actionable insights, enabling you to diagnose and address issues before they escalate.

WOWL isn’t just a tech platform; we’re a team of global logistics experts working alongside you, your team, and your providers. Our approach ensures you have a command center that empowers you without competing with your service providers.

With WOWL, you gain the tools and expertise needed to navigate these complex challenges confidently. Let us help you streamline your logistics and stay ahead of the curve.