Chaotic start to 2025 expected for container shipping: DHL

An incoming Trump 2.0 Presidency and renewed tariff wars might be looming, but how this will impact ocean shipping markets ahead of his 20 January inauguration remains unclear, according to the latest update from DHL.

"Ocean freight spot rates from China to the U.S. have drifted lower in recent weeks, though still significantly higher than a year ago. Asia-Europe trade lanes – where annual contract negotiations are underway – have shown a more recent spark."

Niki Frank, CEO, DHL Global Forwarding Asia Pacific says: "Given the strong demand pulled forward this year, we were expecting demand to come down significantly toward the end of the year. Yet, November volumes were similar to October and September. We are seeing steady demand, though the market is reacting more slowly than many were expecting given the disruption on the radar. But if the typical seasonal trend holds, we are expecting a slight bump up toward December and January."

Tariff landscape
Pinning down exactly what new U.S. tariffs will be implemented, and when, is a difficult task given Trump’s transactional approach to bilateral relations with both friends and foes, the update added. "Announcements thus far from the Trump camp include promises to introduce 25 percent tariffs on imports from Canada and Mexico, along with at least a 10 percent tariff hike on Chinese imports.

"Additionally, Trump said he would introduce new 100 percent tariffs against BRICS countries — an intergovernmental organisation initially founded by Brazil, Russia, India, China, and South Africa to identify business opportunities that have now expanded to include nations like Egypt, the UAE, Ethiopia and Iran — should they try to create a rival currency to the U.S. dollar."

Frontloading to wait-and-see
Experts speaking on The Freight Buyer’s Club podcast said many shippers were taking a wait-and-see approach to tariffs, DHL says in its update.

"A Logistics Trends & Insights (LTI) representative said that U.S. inventory levels were currently high, which could help explain why rates have so far not surged. This is because many shippers frontloaded cargo earlier in the year before the September 30 expiry date of the International Longshoremen’s Association’s (ILA) Master Contract covering U.S. East and Gulf Coast ports.

"The expiry of the contract led to a three-day shutdown of ports before the ILA and the United States Maritime Alliance (USMX) reached a short-term contract extension, which is due to expire on January 15, 2025."

January disruptions loom ahead
Despite ongoing negotiations, the ILA and USMX remain divided on port automation, with only wage increases currently agreed upon.

Trump has come out in support of ILA in their tussle against automation at the U.S. ports. "I’ve studied automation, and know just about everything there is to know about it," Trump said after his meeting with ILA President Harold Daggett and Executive Vice President Denniss Daggett.

Should the ILA and USMX be unable to come to an agreement by January 15, a potential second port lockdown in January, combined with prospective new tariffs, could tighten shipping markets in the coming weeks, the update added.

“East Coast ports account for almost 50 percent of the U.S. inbound volumes,” says Praveen Gregory, Senior Vice President, Ocean Freight, DHL Global Forwarding Asia Pacific. “If the East Coast ports are 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.”

Gregory also pointed out that while the factors affecting ocean freight are manageable individually, looking at the bigger picture, the possibility of ILA strikes in the U.S. East Coast ports could also tie up the vessels moving into Gemini, delaying the Gemini cooperation kick-off.

Alliance restructuring
The start of February will also see ocean shipping alliances restructure, the update added. "Disruptions in services are expected as ocean shipping alliances shift to their new set up mainly on East-West trades."

Frank says: “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."