Freight and Logistics News and Market Update

Air

• The air cargo market has reached peak season with demand exceeding capacity, pushing rates to 2024 highs. Shanghai to North Europe hit $5.07/kg, and Shanghai to North America reached $6.61/kg, both significant increases. Trans-Atlantic westbound rates also climbed to $2.64/kg, reflecting strong demand and limited capacity.

Ocean

• The Port of New York and New Jersey is seeking a larger share of revenues from terminal transactions and operations, while requiring tenants to fund infrastructure upgrades, to capitalize on increased maritime trade profits and growing demand for port assets.
• The maritime sector, crucial to global trade, aims to cut emissions by 40% by 2030 through adopting low-carbon fuels and digital technologies. Challenges include training seafarers, updating regulations, and investing in sustainable fuel infrastructure. While global efforts are underway, additional support is needed for an inclusive transition.

Ground

• An estimated two-thirds LTL freight originates from the manufacturing industry. The Institute of Supply Management's Manufacturing Purchasing Managers' Index (PMI) reported a November reading of 48.4, indicating the eighth consecutive month of contraction (a reading below 50 signifies contraction). The index has been below 50 for 24 of the past 25 months. Historically, a PMI of 52.3 or higher correlates with increased manufacturing orders, according to Census Bureau data.

Air

• In 2024, Ecuador's air cargo sector experienced significant growth, with a 7.55% increase, moving 256,857 metric tons by August. Flowers were the predominant export, comprising approximately 92% of shipments.
• LATAM Cargo and Delta Cargo have expanded their partnership to enhance pharmaceutical transportation between North and South America. This initiative integrates their networks, offering 26 joint stations with key transfer points in Atlanta, New York-JFK and Miami. The collaboration aims to provide faster, more reliable delivery for sensitive pharmaceutical products, while increasing routing options, capacity and optimizing transit times for customers.
• On November 26, 2024, Brazilian customs auditors began a nationwide strike to advocate for salary adjustments following unsuccessful negotiations with the government. The action affects all ports and airports in Brazil, causing delays in cargo clearance and disruptions to logistics and trade.

Ocean

• Container movement increased by 15.8% in Panamanian ports in the first 10 months of 2024, compared to the same period last year.

Trade and Economic Growth

• In 2024, the Asia-Pacific region drove 56% of global air cargo growth, fueled by rising eCommerce demand and high-tech goods shipments. Key hubs, including Hong Kong and Dubai, played a significant role in facilitating this growth. The region’s stability reinforced its critical importance in global logistics.
• Despite projected trade growth in APAC of 3.9% in 2024 and 4.4% in 2025, overall economic growth in the region is projected to be slower than the global average, with growth forecasted at 3.5% in 2024 and dropping to 2.7% by 2030. This slowing growth is due to growing protectionism, rising trade tensions and policy uncertainty.

Ocean

• Exporters from China, Canada and Mexico are accelerating shipments to the United States to avoid potential tariffs proposed by the upcoming administration, leading to increased port activity and higher freight rates. Businesses are adjusting timelines and exploring alternative production methods to mitigate risks.
• Drewry’s Intra-Asia Container Market Insight service highlights the robust growth of intra-Asia container shipping, which grew at a 3.6% CAGR from 2019 to 2023, significantly outpacing global shipping growth of 0.7%. In 2023, intra-Asia container trade reached 52 million TEU, driven by economic integration, rising demand and strong manufacturing across major economies in the region such as China, Japan, South Korea and ASEAN countries.
• Rates for shipping containers from Asia to the US East Coast remained stable, while rates to the West Coast fell by 5%. Global average shipping rates declined by 1% WoW, with Drewry noting that rates to the East Coast were about $700 per FEU higher than those to the West Coast. As the peak shipping season has ended, transpacific rates are significantly lower (35%-45%) than the peak in July. However, upward pressure on container rates remains due to stronger-than-normal demand as shippers frontload in anticipation of potential US tariff increment and work stoppages at US East Coast ports.
• Ocean carriers on Asia to North Europe and Asia-Mediterranean routes are raising rates ahead of Dec. 1 freight-all-kinds (FAK) increases, targeting a 30% spot rate hike. This move leverages pre-Lunar New Year demand and aims to strengthen carriers' positions in annual contract negotiations.

Ground

• Road transport continues to be critical to Southeast Asia's growing role in global supply chains, with Vietnam leading the region in manufacturing exports ($440 billion in 2023). With strong land connectivity networks in Southeast Asia, road freight remains the most feasible door-to-door transportation mode. As China invests heavily in the region, transportation infrastructure improvements (e.g., highways and rail links) in the region will enhance logistics and reduce costs. By 2025, Vietnam plans to complete 3,000 km of highways to further strengthen its logistics network. Other government initiatives in the region such as the ASEAN Customs Transit System streamline cross-border shipments and reduces paperwork.

Air

• Finnair will cancel around 300 flights on December 9 and 13 due to a pilots' strike, with additional disruptions expected before and after these dates. The strike affects key intercontinental destinations such as New York, Tokyo and Delhi, along with domestic and European routes. Finnair COO Jaakko Schildt criticized the strike, while the pilots' union is demanding compensation for efficiency improvements that helped the airline recover after Covid. Negotiations with the Finnish employers' association Palta have been ongoing for three months, with mediation beginning in November.
• European and US airlines are urging the removal of sanctions on Russian airspace, citing competitive disadvantages compared to carriers from China, the Persian Gulf and Turkey, which continue to use these routes for more cost-effective operations. Western carriers face longer flight paths, increased fuel consumption and higher operational costs due to the airspace restrictions, while also contending with elevated taxes, stringent regulations and climate policies. Airlines such as KLM and United Cargo emphasize the inequity of the current situation, noting significant impacts on routes and industries, including pharmaceuticals.  

Ocean

• BIMCO has introduced the FuelEU Maritime Clause for Time Charter Parties 2024 to help the shipping industry comply with new regulations starting January 1, 2025. The clause makes ship owners responsible for compliance. If their Compliance Balance is negative, meaning they exceed the carbon emissions limit, they may face a surcharge. If it's positive, they may qualify for compensation.

Air

• Emirates has joined the Move to -15°C global coalition, becoming the first airline to support this effort to make frozen food transportation more energy-efficient. The initiative, launched at COP28, focuses on raising storage temperatures from -18°C to -15°C to save energy without affecting food quality. Emirates SkyCargo will use its experience in transporting large amounts of fresh food daily to work with partners and improve the frozen food supply chain.
• Qatar Airways Cargo is working with Cainiao, a leading eCommerce logistics company in China, to make shipping faster and support local economies. Using its airport in Doha, Qatar Airways Cargo will quickly deliver packages to the Middle East, Europe and Africa, helping meet the growing demand for eCommerce shipping.
• Etihad Cargo now allows pets like cats and dogs to travel up to 24 hours instead of 17, ensuring safe transport for longer trips. Extra health checks have been added for snub-nosed breeds, such as pugs and bulldogs, which can now fly between November and March.

Ocean

• In October, cargo at India’s government-owned ports dropped by 3.2% to 68.22 million metric tons, mainly due to less crude oil and coal being shipped. International cargo fell by 5.5%, while domestic coastal shipping rose by 5.3%. Private ports, like Adani Ports, saw an 8% increase in cargo, reaching 257.7 million metric tons.
• Between July and October 2024, Chittagong Port, Bangladesh's main seaport, handled 6.5% more containers compared to the same time in 2023. The port is also improving, with fewer containers stuck in storage.
• MSC has improved its Northwestern Europe to West Africa route by introducing direct services to Angola, Congo and DR Congo. This represents the company’s commitment to provide direct ocean services to Angola, Congo and DR Congo including dry, reefer dry and project cargo solutions. The new services will offer Direct calls to Pointe Noire, Luanda ports and access to Matadi port in DR Congo from Rotterdam.

Ground

• Gulf Warehousing Company (GWC) and Saudi Offshore Fabrication Company (OFC) are collaborating to build a 100,000 square meter Grade-A warehouse at Ras Al-Khair Industrial Port in Saudi Arabia. This partnership aims to strengthen Saudi Arabia's logistics infrastructure and establish the Kingdom as a key logistics hub in the Middle East.
• Kerala, India, is spending INR 1,000 crore to create the Vizhinjam Development Zone. This will support regional growth and buy land to improve access to the Vizhinjam Deep Sea Port. It also includes building a corridor for businesses and industries between Punalur and Vizhinjam.
• AJEX Logistics has signed a letter of intent with Bahrain Airport to build a new logistics facility at Bahrain Cargo Village. The facility will support growing eCommerce and industrial demand in Bahrain and the MENA region, boosting innovation and improving AJEX's market competitiveness.

• Starting December 1, China will introduce new tariff laws and updated duty collection measures impacting US businesses. Notable changes include extending the period for duty refunds and payments to three years, stricter enforcement by China Customs and more options for customs rulings to address issues like classification, valuation and origin. Additionally, eCommerce platforms and logistics providers must act as duty and VAT withholding agents. China's customs valuation rules will also be updated to align with international standards. Businesses should monitor regulatory updates, prepare for audits, apply for customs rulings, maintain authorized economic operator status and consider voluntary disclosures to mitigate penalties.
• President-elect Trump has announced plans to introduce higher tariffs on imports from China, Canada and Mexico starting January 20, 2025. These include a 25% tariff on goods from Canada and Mexico until they address illegal immigration and drug trafficking and an additional 10% tariff on Chinese imports due to concerns over drug-related issues. The proposal raises questions about its legal basis, implementation timeline and impact on trade under the USMCA, which typically allows duty-free trade between the US, Canada and Mexico. Mexican President Claudia Sheinbaum has warned of potential retaliatory actions, while China and Canada have yet to issue similar threats but may do so if the tariffs are enforced.
• President-elect Trump announced that BRICS countries (Brazil, Russia, India, China and South Africa) must abandon plans for a new currency or alternatives to the US dollar or face 100% tariffs on exports to the US. This comes after some BRICS members, like Brazil, suggested a common currency, though leaders such as President Putin have dismissed the idea, with the group instead focusing on using national currencies for trade and expanding financial cooperation to counter Western sanctions.
• US Customs and Border Protection (CBP) announced new product reclassifications effective January 20, 2025. Laminated fabrics, previously considered US origin, will now be classified based on the country where the fabric is manufactured, as outlined in ruling HQ H299896. These fabrics, made from various fibers and laminated to US-supplied foam, will have their origin determined by the fabric formation process. CBP is also reclassifying certain salsas from prepared vegetables to sauces under HTSUS heading 2103, recognizing them as semi-solid products that enhance food with flavor, moisture and texture contrasts.
• The Canada Post strike may delay mail processing by the CBSA, including, but not limited to, the mailing of decisions and cheques resulting from a casual refund request.
• New Canada Customs Tariff files will come in effect on January 1, 2025. The 2025 Tariff reflects scheduled duty rate reductions contained within the legislation of individual Free Trade Agreements, as well as the substitution of certain tariff classification pre-ambles and tariff classification numbers in chapters 3, 28, 29, 84 and 85. Importers are invited to access the new Canadian customs tariff to review the changes and convert their HS commodity database where applicable, to help ensure uninterrupted movement of goods and maintenance of duty free privileges after January 2025. Email tmscanada@ups.com for assistance.