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Many shipments are being moved early to avoid the potential impact of a port strike by the International Longshoremen's Association (ILA) after January 15, along with the possibility of tariff increases next year, driving transpacific freight rates higher at the start of December. 

Rates from Asia to the U.S. West Coast have now exceeded the pre-Lunar New Year 2024 peak recorded in January when the Red Sea crisis began.

Some carriers are reportedly applying significant GRIs to try to push rates higher at the start of the month.

However, the arrival window to ship cargo from Asia to the US East Coast ahead of the strike is closing. In addition, there is a large amount of inventory that was built up before the strike in October, and there are still several months before the new tariffs take effect. These factors may make the early December rate hikes difficult to sustain, although rates may increase later in the month or early January ahead of the Lunar New Year.

Asia-Europe rates were flat last week but have started to increase this week. Rates from Asia to the Mediterranean are approaching $6,000/FEU on December GRIs, up $1,000/FEU from late November.

If these rate hikes are sustained, they may reflect effective capacity management by carriers through increased blankings and an early pick-up in demand ahead of the Lunar New Year. Ensuring that essential cargoes are shipped before Lunar New Year is particularly important for exporters to the Mediterranean region, where lead times are the longest due to diversions through the Red Sea. These cargoes therefore need to be shipped early.

Lines continue to announce adjustments to their services that will take effect with the alliance restructuring in February. MSC has added new port pairs to its standalone services, while the Gemini Cooperation alliance has begun accepting bookings for its “hub and spoke” model.

Freightos Air Index data shows that rates from China to North America and Europe have yet to spike, even as we enter the peak weeks of early December. In addition to some exporters and forwarders’ frontloading and securing capacity in advance, another important reason for the relatively stable peak season, despite strong e-commerce volumes, is that carriers have been able to move a significant amount of freight capacity to ex-Asia lanes for Q4.

 

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Source: Phaata.com (via Container-News)

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