BAROMETER. The prospect of an increase in customs duties is currently pushing freight rates up on lines serving the United States. On Asia-Europe routes, however, the market fundamentals remain worrying.
The overriding feeling in November is that the container shipping market is once again marked by short-termism on the part of the parties involved. The shipping companies are trying to fix rates that at levels that exceed their operating costs, while the top five global forwarding groups are targeting higher margins as they prepare their 2025 budgets, by pursuing extremely aggressive purchasing strategies, encouraged by a balance of power which is currently in their favour. The long-term contract negotiating season, which is currently under way, is set to last a long time.
- Record blank sailings between Asia and Europe
Port call cancellations are like to reach a record level during the period up to the start of the Chinese New Year celebrations on 29 January. For the shipping companies, these cancellations are the sole arm of defence at their disposal to limit capacity. However, the fall in cargo volumes on Asia-Europe routes in 2024, combined with big increases in operating costs, will lead to results which will certainly be up on those of 2023 but disappointing nevertheless, with, notably, a reduction in slot operating margins. Moreover, preparations for the deployment of the new alliances on 1 February 2025, will further disorganise services and reduce available capacity.
- Buyers favoured by alliance recomposition
As part of the recomposition of the alliances, the shipping companies know that they will have to find ways of attracting customers and differentiating their offers if they want to achieve top performance on a market which we know already will be difficult for them, once again because of excess capacity. The remodelling of the alliances currently under way will sharpen up competition. Already, in early December, Maersk announced that it was softening its spot market rate policy.
- Donald Trump's threats
The month of November was marked by announcements from the future president of the United States regarding his plan to increase customs duties on US imports. During his election campaign, Donald Trump announced his intentions. Duties on goods from Europe would increase by 10-20% and those on goods from China by 60%.
Since then, however, a second salvo has been fired. The president-elect has threatened to impose an additional 25% increase on goods from Mexico and Canada. In this way, it would seem that he wants to renegotiate the 2026 revision clause in the US-Mexico-Canada free trade agreement concluded in 2020 during his first presidential mandate. Clearly in the firing line are China's investment in the Mexican automobile sector and particularly the BYD group's plans to set up a production facility there. From the point of view of the container shipping sector, the switch of cargo flows towards Mexico as a means of getting round US sanctions against China will be under closer surveillance than expected, which could put the brake on the nearshoring trend (...)
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