Century Weekly Market Update Nov. 18 - Nov. 24

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 dropped slightly, decreasing by only 1%. The Environmental Protection Agency distributed US$ 3 billion to 55 ports to support zero-emission initiatives, Maersk pioneered dual-fuel retrofit, and hurricane aftermath continued to disrupt intermodal shipping in Central Florida. Additionally, multiple new shipping services were added to support South Africa’s grape export season.

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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Rising Shipping Capacity Amongst Surge in Imports from the Far East to South American East Coast

• Trade between the Far East and the South American East Coast has surged, with record-high volumes and a 73% Y/Y capacity increase, requiring companies to reevaluate shipping strategies in this corridor.
• The rise in shipping capacity is driven by the expansion of existing services and the introduction of new routes, significantly increasing vessel deployment in the region
• Actual transit times on this trade route have deteriorated, averaging 47 days in Q3 2024 compared to the promised 38 days, while schedule reliability has plummeted to a historic low of 19.5%.
• Despite declining transit reliability, increased capacity has softened spot rates, which fell 33.8% since July 2024, though long-term rates remain significantly higher than in 2023
• The rapid capacity expansion could lead to congestion and delays at ports, creating risks for supply chains if infrastructure cannot support the larger ships being deployed.
• As trade patterns shift further in 2025, shippers must prioritize transparency and data-driven decision-making to manage freight costs, transit times, and potential disruptions in a volatile global trade environment.

Increasing Volume from Greater China to Mexico May Lead to Port Congestion

• The trade lane between China and Mexico has seen record-breaking demand in 2024, with an 18.9% Y/Y increase in container volumes through September, leading to unprecedented rate fluctuations.
• Spot freight rates peaked at US$ 7,770 per FEU in July 2024, driven by demand, but have since softened by 51%, highlighting the sensitivity of this immature trade lane to volume shifts.
• Volatility is high compared to other trade lanes; spot rates on this route peaked six times in 2024, compared to only three for the China-to-US West Coast route.
• The spread between short-term and long-term rates on this trade has narrowed significantly.
• Infrastructure challenges in Mexican ports and inland transport systems must be addressed to accommodate growing container volumes and avoid congestion or delays, especially if larger vessels may be deployed in the future.

Higher Shipping Costs for LTL Shippers Expected in the New Year

• LTL carriers are introducing significant general rate increases (GRIs) for 2025, ranging from 4.9% to 7.9%, as part of a broader effort to align pricing with rising operating costs and network expansions.
• The industry is moving toward profitability-focused pricing strategies, with carriers using advanced costing models to ensure margin goals are met on a lane-by-lane basis rather than simply aiming for higher freight volumes.
• Increased accessorial charges, such as extreme length fees and remote delivery surcharges, are being applied to incentivize more efficient shipping practices and to offset higher delivery costs.
• Shippers may face higher costs if their freight does not meet new efficiency requirements, such as palletization and stackability, as carriers are increasingly rejecting non-conforming shipments or charging premium rates for them.
• Carriers are investing heavily in technology, such as dimensioning equipment and data analytics, to ensure accurate freight classification and pricing, as well as to improve overall operational efficiency.
• While base rates remain the primary focus for pricing adjustments, the cumulative effect of rate increases, accessorial charges, and premium services is expected to result in higher overall shipping costs for LTL shippers in 2025.

Weekly Blank Sailings Report:?

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Century’s Blank Sailings Report for the week of November 18th – November 24th. 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 779 port omissions, a 0.9% decrease compared to the week prior.
• Shanghai recorded the highest amount of port omissions last week with 74, followed by Ningbo with 72 and Singapore with 62.
• Other ports with notably high omissions last week were Busan with 45 and Port Klang with 36.
• Busan and Port Klang both saw significant increases in blank sailings W/W, increasing by 67% and 57% respectively.
• Looking towards the coming weeks, Century’s data shows a 7% decrease in currently scheduled blank sailings for week 48.
• Next week’s preliminary data shows a notable increase in Colombo, Sri Lanka and notable decreases at many major ports.

Port omissions data for the most frequently omitted ports during week 47 can be found in the table below:

Our?full Blank Sailings Report for the week of November 18th – November 24th below provides a full list of every current scheduled port omission from Week 47 to Week 52 as of November 25th, 2024. 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 47 Blank Sailings Report

Week in Review:?

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Global Container Freight Index Drops Slightly W/W

• The Global Container Freight Index dropped slightly this week with rates decreasing by 1% W/W to US$ 3,590.
• China/East Asia to North America East Coast rates stayed steady this week with rates still at US$ 5,387.
• China/East Asia to North America West Coast rates dropped by 4% W/W to US$ 5,122.
• Seven major routes saw decreases in rates W/W and four major routes had steady rates W/W.
• The China/East Asia – Mediterranean route was the only major trade lane to experience rate increases W/W with rates soaring by 11% to US$ 4,859.

Major Carriers' Q3 2024 EBIT increased 600% Y/Y

• Major carriers collectively reported a 600% Y/Y increase in Q3 2024 EBIT, reaching US$ 17.06 billion, driven by higher freight rates and increased volumes despite lingering supply chain disruptions.
• COSCO led the industry with an EBIT of US$ 4.71 billion for the quarter, though its EBIT per TEU of US$ 716 was outpaced by ZIM, which achieved the highest EBIT per TEU at US$ 1,273.
• Eight out of nine reporting carriers posted EBIT above US$ 1 billion, showcasing a rebound in profitability well above pre-pandemic levels.
• Volume growth has been uneven, with COSCO increasing its global shipping volumes by 10.8%, reflecting its strategic focus on regions with heightened demand, such as the Asia-North America route. Current profitability levels are being bolstered by supply chain disruptions that continue to support elevated freight rates, even as market conditions stabilize compared to the pandemic peak.
• While the market remains in a transitional phase, companies should anticipate continued pressure on freight costs as carriers maintain profitability through strategic pricing and volume management.

Hurricane Aftermath Continues to Disrupt Intermodal Shipping to Central Florida

• Back-to-back hurricanes in September and October disrupted intermodal services of CSX Transportation, heavily impacting terminals in Tampa, FL and Winter Haven, FL.
• Severe congestion at the Winter Haven terminal left drivers waiting hours to mount containers on chassis due to cargo backlogs and equipment shortages.
• CSX implemented recovery measures such as establishing alternate service options in Tampa and Jacksonville and deploying additional resources to manage surging volumes.
• Power outages and infrastructure damage caused delays in final-mile drayage, significantly increasing dwell times at terminals and on surrounding roadways.
• Despite modest growth in intermodal volumes to the Southeast, the region remains less active compared to major lanes like Los Angeles to Chicago, which saw a 20% Y/Y increase in October.
• While conditions have reportedly improved, companies shipping to central Florida should monitor potential disruptions and prepare contingency plans to address lingering effects.

A Multitude of Shipping Disruptions Continue to Threaten Supply Chains

• Red Sea shipping lanes had over 90 disrupted vessels in the past year, forcing carriers to reroute shipments around South Africa, leading to significant delays and increased shipping and fuel costs.
• Rising transportation costs and delayed shipments due to these reroutes are putting unsustainable pressure on U.S. businesses and consumers, further straining global supply chains.
• Negotiations between the International Longshoremen's Association (ILA) and U.S. Maritime Alliance (USMX) have stalled, with a January 15, 2025, deadline for a labor deal that, if unmet, risks a strike at East and Gulf Coast ports.
• A strike coinciding with the Chinese Lunar New Year in February could amplify supply chain disruptions, as many Chinese factories shut down during the holiday, further delaying shipments.
• The American Apparel & Footwear Association (AAFA) has called on both the ILA and USMX to resume talks and avoid a work stoppage, emphasizing the need to stabilize an already fragile global logistics network.
• The AAFA has also urged the Biden administration to expand efforts to protect Red Sea shipping lanes, highlighting the urgency of addressing geopolitical and labor challenges that threaten U.S. supply chains.

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EPA’s $3 Billion Boost for Zero-Emission Port Operations

• The Environmental Protection Agency’s (EPA) US$ 3 billion Clean Ports Program will fund zero-emission initiatives at 55 ports, including the purchase of over 1,500 units of zero-emission cargo-handling equipment: 1,000 drayage trucks, 20 vessels, and 10 locomotives.
• In addition to equipment upgrades, the funding will support infrastructure projects like shore power systems, battery-electric and hydrogen fueling stations, and solar power generation to reduce emissions and improve energy efficiency.
• Twenty-one ports will use the grants to replace diesel-powered equipment with advanced zero-emission alternatives, aligning with broader goals to combat climate change and improve regional air quality.
• Ports such as Los Angeles and others are leveraging this investment to accelerate their transitions to zero emissions, contributing to sustainable supply chain operations across the country.

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US Businesses Prepare for Potential Tariff Increases Under Trump Administration

• Many U.S. businesses are stockpiling inventory from China ahead of a potential 60% tariff increase on Chinese goods, which president elect, Trump proposed during his campaign.
• Tariff increases often result in businesses absorbing additional costs, passing them on to consumers through price hikes, or reconsidering their reliance on current suppliers and exploring alternative sourcing options.
• Economists predict that Chinese export growth will remain strong in the coming months as American companies front-load imports to mitigate the risk of impending tariffs.
• While China's share of U.S. imports has declined to 14% in 2023 from 22% in 2017, it remains the largest exporter to the U.S., highlighting the continued dependence of American businesses on Chinese manufacturing.
• Tariffs proposed by Trump, including potential levies of 10%-20% on imports from all countries, could significantly disrupt supply chains and raise costs across industries, particularly for companies with long-standing relationships with global suppliers.

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MSC Reconsiders Cargo Rerouting Amid Customer Pushback in Canada

• MSC initially rerouted Montreal-destined cargo to Halifax due to strikes at Montreal's port, requiring customers to collect shipments from Halifax, over 1,100 nautical miles (approximately 1,265.86 land miles) away, incurring additional charges.
• Customer complaints and potential legal issues over MSC’s reliance on a clause in its bill of lading terms appear to have prompted the carrier to reverse its decision and plan a feeder service to transport cargo from Halifax to Montreal.
• While MSC reportedly plans to use the feeder vessel MSC Sagitta for the service, cabotage rules require government approval before it can proceed, leaving timelines uncertain.
• Cargo destined for Toronto have better access via rail from Halifax, but Montreal-bound cargo faces delays of at least 12 days, with expectations stretching to mid-December due to limited connections.
• MSC’s additional charges, including US$ 550 per container for Toronto destinations and inland tariff rates for other areas, reflect the broader trend of carriers imposing extra fees for rerouted shipments.

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Rising Blank Sailings Amid Flat Container Rates on Asia-Europe Trade

• Container spot rates on Asia-Europe trades have remained largely unchanged for three consecutive weeks despite repeated attempts by carriers to implement rate hikes.
• Carriers face significant challenges in achieving their desired rates, as the proposed FAK(Freight All Kinds) hikes would require a 50% W/W spot rate increase, which forwarders consider highly unlikely to succeed.
• Annual Asia-Europe contract negotiations, traditionally finalized by year-end, are being delayed to the first quarter of 2025, as many shippers prefer to wait until after Chinese New Year to commit to rates.
• In response to stagnant rates, carriers have announced 70 blank sailings globally between now and the end of the year, representing 10% of scheduled departures, with transpacific eastbound trade accounting for the majority of cancellations.
• Shippers and forwarders are advised to prepare for potential disruptions and declining schedule reliability over the next five weeks as carriers may implement additional blank sailings to sustain higher rates.

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Maersk Pioneers Dual-Fuel Retrofit in Decarbonization Push

• Maersk completed its first dual-fuel methanol-capable retrofit on the Maersk Halifax, extending the vessel by 15 meters to increase its capacity to 15,690 TEUs while adding fuel tanks and systems to support low-emission methanol use.
• The retrofit highlights Maersk's strategy to accelerate its decarbonization goals, providing an alternative to newbuilds, though the company acknowledges retrofitting is currently more expensive and lacks a clear business case without regulatory support.
• The International Maritime Organization’s upcoming greenhouse gas framework negotiations, including a potential carbon tax and fuel standards, could significantly improve the financial viability of retrofitting existing ships for methanol or LNG propulsion.
• All top 10 ocean carriers, collectively controlling 84% of global container ship capacity, are now committed to alternative fuel vessels, signaling a major industry shift toward low-emission propulsion technologies.
• Maersk’s broader fleet renewal program includes newbuilds capable of running on both LNG and bio-LNG, reflecting the carrier's multi-faceted approach to achieving net-zero emissions by 2040.

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South Africa's Grape Export Season Sparks New Shipping Services

• Ocean carriers, including Hapag-Lloyd and MSC, are launching specialized services for South Africa’s grape export season, focusing on fast transit times to European markets like Rotterdam, Antwerp, and London Gateway.
• Hapag-Lloyd's Grape Connect service, leveraging its South America-Africa Triangle (SAT) and West Europe-West Africa (WWA) networks, offers a 25-day transit time to Rotterdam but includes transshipment steps in ports such as Luanda.
• MSC's Eastern Cape Express Service, launching in January, features a 21-day transit time from Port Elizabeth to Rotterdam, positioning itself as faster and more direct than Hapag-Lloyd’s service while bypassing Cape Town to enhance efficiency.
• MSC’s recent acquisition of a 25-year concession at Walvis Bay’s New Container Terminal in Namibia gives the carrier significant regional terminal capacity, potentially establishing the port as a major transshipment hub for Southern Africa.
• Both carriers emphasize the advantages of Port Elizabeth over Cape Town for grape exports, citing better transit times and direct connections to key European markets, a critical factor for preserving the freshness of the produce.

Sources:

Xeneta

Xeneta

JOC

Freightos

Sea Intelligence

JOC

Supply Chain Brain

Supply Chain Dive

WSJ

The Loadstar

The Loadstar

JOC

The Loadstar