Century Weekly Market Update Jan. 13 - Jan. 19

Welcome to the Century Weekly Market Update! We’re excited to bring you the latest news and insights from the supply chain and logistics industry over the past week.

Our weekly market update?features a dedicated section on emerging industry trends and a report specifically focused on the frequency and impact of port omissions during blank sailings. These updates provide valuable insights to help supply chain decision makers navigate potential disruptions, optimize their supply chains, and stay informed about the latest industry developments.

Last week, the global container freight index decreased by 9% W/W to US$ 3,893 with all but two major routes experiencing rate declines. Carriers are staying cautious in terms of shipping through the Red Sea following the Houthi announcement of limiting attacks to Israel-affiliated vessels. The Ocean Alliance expanded their global coverage, and the reefer charter market faced rising demand. Additionally, retail sales for the 2024 holiday season hit record highs.?

At Century, we're committed to helping our customers stay a step ahead in these rapidly changing market conditions. Our team of experts are dedicated to providing comprehensive and timely insights to help you make informed decisions and stay competitive.

Emerging Industry Trends:?

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Top 10 Ports for Connectivity Staying Ahead by Large Margin?

• The most-connected ports, particularly the top-10 globally, are consistently increasing their connectivity, which has accelerated significantly since 2020.?
• The growing connectivity gap between the top-10 ports and the next tier indicates a concentration of global shipping activity in fewer major hubs.?
• Ports in the bottom-100 of the connectivity index have seen a steady decline in average connectivity, creating diminishing opportunities for direct shipping routes from these ports.
• The global port network is evolving toward greater reliance on a small number of major hub ports, with smaller ports increasingly serving as feeder nodes.?
• Companies dependent on supply chains may face longer lead times and higher costs if relying on smaller ports due to reduced direct shipping options.?
• Strategic planning is essential to mitigate risks posed by this consolidation, including re-evaluating port choices and building flexibility into logistics networks.?

Rising Truckload Spot Rates Highlight Shifting US Port Logistics Trends?

• Truckload spot rates from major US ports spiked at the end of 2024, driven by seasonal demand and a potential longshore labor strike (since resolved), creating temporary cost pressures.
• Outbound truckload rates from the New York-New Jersey port complex rose by 7% M/M in December 2024 to US$ 2.38 per mile.
• West Coast ports like Los Angeles and Seattle experienced strong growth rates also, with Los Angeles reaching US$ 2.77 per mile, the highest rate in 26 months.
• Despite spot rate inflation, shippers report minimal difficulty securing truck capacity, leading to skepticism about whether rising spot rates will significantly affect long-term contract pricing.
• Companies should prepare for potential cost fluctuations and regional variations in truckload rates, especially during peak seasons or as freight volumes shift across major ports.

Declining Demand and Extended Spot Rate Guarantees for Trans-Pacific Carriers

• Many ocean carriers on the eastbound trans-Pacific route are extending spot rate guarantees through mid-February 2025.
• The typical general rate increase (GRI) planned for January 15th has been abandoned, with some carriers offering rare 30-day guaranteed rates to secure volume.
• Upcoming Lunar New Year factory closures in Asia are reducing production and contributing to carriers' efforts to build container "roll pools" at load ports to stabilize volumes.
• Spot rates from North Asia to the US West Coast have declined to US$ 4,700 per FEU, down 10% W/W, while East Coast rates have dropped by 7% W/W, reflecting softening market conditions.
• Some carriers are providing promotional "bullet" rates below standard spot prices to attract shippers, particularly for shipments to the US West Coast, where rates are in the low US$ 4,000s.
• Shippers should prepare for potential further rate declines in the short term but remain alert to changes in tariff policies or frontloading trends that could affect pricing later in 2025.

Weekly Blank Sailings Report:?

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Century’s Blank Sailings Report for the week of January 13th – January 19th. Discover the latest insights on the current trend of blank sailings through the most up-to-date carrier data direct from Century.

• Last week saw a total of 617 port omissions, a higher number than expected, causing a slight W/W increase of 1.5%.
• Shanghai recorded the highest amount of port omissions last week with 45, followed by Ningbo with 43 and Singapore with 42.
• Other ports with notably high omissions last week are Shekou with 31, Kaohsiung with 29, and Hong Kong with 26.
• Ho Chi Minh City saw a significant increase in blank sailings W/W, increasing by 66.7% from 12 to 20 blanks.
• Looking towards the coming weeks, Century’s data shows a steady number of blank sailings W/W with a prediction of 621 blanks in week 4.
• Next week’s preliminary data shows notable increases in port omissions to be expected at ports in Bangkok and Busan.

Port omissions data for the most frequently omitted ports during week 3 can be found in the table below:

Our full Blank Sailings Report for the week of January 13th – January 19th below provides a full list of every current scheduled port omission from Week 3 to Week 13 as of January 20th. The second tab breaks down this data into an easy-to-read table which shows port omissions by each location per week so you can see which locations are being omitted the most and which locations are experiencing the sharpest increase in port omissions.

Century consistently strives to enhance customer satisfaction by proactively addressing challenges in the shipping process. In our commitment to securing space for our valued customers amidst ongoing carrier constraints, our dedicated operators diligently undertake additional measures. After working through meticulous analysis of Carrier Booking and the Actual Shipped Ratio, we found that our teams are currently, on average, making two carrier booking requests per container in order to help ensure our customers' cargo flows as smoothly as possible.

Click here to DOWNLOAD the full Week 3 Blank Sailings Report

Week in Review:?

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Global Container Freight Index Drops Significantly W/W

• The Global Container Freight Index decreased last week, dropping 9% to US$ 3,893.
• China/East Asia to North America East Coast rates declined, decreasing by 3% W/W to US$ 6,715.
• China/East Asia to North America West Coast rates significantly decreased, dropping by 10% W/W to US$ 5,321.
• The China/East Asia – North Europe rates also decreased significantly W/W, decreasing by 17% to US$ 4,694.
• The only routes that saw increases W/W were North America West Coast – China/East Asia and North Europe – China/East Asia.

Key Developments in the Multipurpose Vessel (MPV) Market

• Norden's lease of four multipurpose vessels (MPVs), including two slated for delivery by 2026, reflects growing demand for project cargo and favorable market fundamentals.
• The new MPVs are designed to accommodate specialized cargo such as windmill components, industrial equipment, and steel, with biofuel compatibility to meet evolving customer and environmental needs.
• Limited MPV fleet growth, attributed to low order volumes and delayed deliveries, is expected to drive higher charter rates through 2026, as noted by maritime analysts like Drewry Research.
• The global MPV fleet remains constrained, as projected 2025 deliveries of 1.8 million dwt fall short of offsetting an aging fleet and slow newbuild growth.
• Strong demand for project cargo vessels is forecasted, particularly within intra-Asia routes driven by energy projects that are progressing as planned.
• Companies reliant on breakbulk or project cargo shipping should anticipate tighter capacity and potentially higher costs, making early planning and flexible shipping strategies crucial.

Red Sea Shipping Developments and Implications for the Container Industry

• Ocean carriers are maintaining a cautious stance on Red Sea transits, despite the Houthi announcement of attacks on Israel-affiliated vessels only, as they prioritize ensuring safe passage for ships.
• The 42-day ceasefire in Gaza may reduce shipping attacks, but carriers remain unconvinced of immediate safety improvements.
• Prolonged diversions around Africa due to the Red Sea crisis have absorbed over 12% of global container fleet capacity, temporarily elevating freight rates and capacity utilization.
• A return to Red Sea routes via the Suez Canal is expected to flood the market with excess capacity, potentially leading to sharp declines in freight rates and supply chain disruptions.
• Increased ship scrapping and slow steaming could help offset capacity surpluses, but analysts predict these measures may not be enough to prevent significant market volatility and rate declines.
• The container industry's profitability, buoyed by diversion-driven high rates in recent years, faces downward pressure as new ship deliveries add to overcapacity concerns in the medium term.

Automotive Suppliers Facing Uncertainty Must Plan for Tariff Changes

• The proposed US tariffs against Canada and Mexico could disrupt automotive supply chains, especially given the high level of parts and materials traded between the U.S., Mexico, and Canada.
• With Mexico accounting for 16.1% of U.S. vehicles and nearly 42% of auto parts imports, potential tariffs would significantly increase costs for U.S. automakers and suppliers, particularly if renegotiations of the United States-Mexico-Canada Agreement are implemented.
• Automotive suppliers must create company-specific contingency plans, as tariff impacts will vary widely depending on their supply chains and contract provisions.
• Vehicle manufacturers have strong incentives to help suppliers navigate tariff increases, either by helping relocate production or by lobbying for exemptions or delays.
• Suppliers can take steps like confirming product classifications, tariff engineering, and considering shifting production to countries with favorable trade relations to mitigate potential tariff impacts.
• Engaging with policymakers and understanding tariff exclusions or opportunities like foreign trade zones can help suppliers manage the risk of increased duties and remain competitive under new tariff regimes.

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US Ports Set Legislative Priorities for 2025 Amid Concerns Over Tariffs and Clean Energy Funding

• The American Association of Port Authorities (AAPA) has outlined priorities for the incoming Trump administration, focusing on federal spending for maritime transportation and navigation, with a strong emphasis on infrastructure investment.
• AAPA urges Congress to maintain funding for ports through the Bipartisan Infrastructure Law (BIL), which allocated US$17 billion for ports, including US$2.25 billion for the Port Infrastructure Development Program (PIDP).
• While the Trump administration may target the Inflation Reduction Act (IRA), which funds clean energy initiatives at ports, funding already pledged to ports is considered secure despite concerns over future reductions.
• AAPA advocates for permitting reform, easing LNG development restrictions, and relaxing vessel speed limits, which align with broader infrastructure and environmental goals.
• Concerns over Trump's proposed tariffs on imports highlight potential impacts on cargo volumes and port revenues, with the AAPA urging that any tariff revenue be redirected to port infrastructure to improve supply chains.
• The transition of ports to cleaner energy, including electric-powered machinery and charging infrastructure, faces uncertainty due to possible changes to the IRA under the new administration.

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Ocean Alliance Expands Coverage with New Shipping Network Amid Global Shifts

• The Ocean Alliance's "Day 9" product will add 41 service loops and 390 vessels, including three new routes: the trans-Pacific PSX and PNW5 services and the LL3 Asia-Europe route, expanding capacity and coverage.
• To ensure safety amid instability in the Red Sea, OOCL will continue to divert vessels around the Cape of Good Hope until further notice, impacting transit times and routes.
• Outside of alliance services, OOCL will introduce six new trans-Atlantic services from February, providing additional options for shippers in that region.
• The Gemini Cooperation between Maersk and Hapag-Lloyd introduced a hub-and-spoke model, while Ocean Alliance, Premier Alliance, and MSC focus on direct services, marking a shift in shipping strategies.
• Ocean carriers are forming partnerships beyond their traditional alliances to address coverage gaps, ensuring broader and more flexible service options for shippers.
• Shippers should anticipate potential disruptions during the transition to these new networks but also consider leveraging the expanded services to optimize their supply chain routes.

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Shippers Face Challenges from Front-Loading and Diversion Amid Port Strike Concerns

• Shippers responded to the potential East Coast and Gulf Coast port strike by front-loading cargo and pausing bookings, which has led to delays and elevated volumes that need to be processed at affected ports.
• Retailers brought in spring merchandise early to avoid stock shortages in case the strike would occur, leading to a temporary increase in imports ahead of the strike's resolution.
• Some shippers took additional steps like sourcing from secondary suppliers and rerouting shipments to West Coast ports, resulting in longer transit times, higher transportation costs, and an increase in inventory.
• The actions taken in response to the potential strike are expected to affect financial metrics, particularly inventory levels, cost of goods sold, and working capital in the short term.
• U.S. export reefers and hazmat freight are particularly affected by the disruptions from the front-loading and diversion strategies, as rail services have also faced delays while resuming operations.

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Reefer Charter Market Faces Uncertainty Amid Changing Dynamics and Rising Demand

• The global reefer charter market faces uncertainty, with medium-term trends increasingly difficult to forecast despite the rising volume of perishable and temperature-sensitive goods.
• Specialized reefer containers, which hold less than 3% of global reefer capacity, account for 15-18% of perishable goods trade due to greater efficiency and demand inelasticity but are still influenced by broader container shipping market dynamics.
• Pricing for reefer containers has become unpredictable and detached from traditional supply-demand logic, driven by a range of factors including indirect variables and unexpected and impactful global events.
• Competition among carriers, especially on specific trade lanes, significantly influences reefer container pricing and availability, with fewer services increasing the potential for higher costs.
• In the short-term, growing consolidation in the container shipping industry may reduce competition and increase costs for cargo, while in the long-term, the disappearance of specialized reefer alternatives may further streamline options in the reefer market.

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J.B. Hunt Reports Strong Peak Season but Faces Pricing Challenges for 2025

• J.B. Hunt Transport Services reported strong peak season performance for its intermodal and highway services, with customers securing capacity earlier than usual.
• Consolidated revenue for Q4 2024 fell 5% Y/Y to US$3.15 billion, and adjusted operating income was down 13% compared to the previous year.
• Intermodal revenue decreased 2% Y/Y to US$1.6 billion, despite a 5% increase in loads, driven by a 6% drop in revenue per load.
• The company faced margin pressures due to elevated costs, including those for equipment repositioning and additional drivers hired for peak season.
• J.B. Hunt expects a 20% to 25% sequential decline in operating income for Q1 2025, based on normal seasonal trends.

Sources

Sea Intelligence

JOC

JOC

Freightos

JOC

JOC

SupplyChainDive

JOC

JOC

SupplyChainDive

JOC

FreightWaves