[Nov. 2024] 2024 Review of Logistics and Outlook for 2025

: The SCFI began rising in late 2023 due to Cape rerouting and capacity absorption caused by port congestion. Expectations of high U.S. tariffs on China (in May) and potential East Coast port strikes (in October) prompted early shipments, driving rates up until early July. However, after the surge in early shipments, declining demand and new vessel deliveries caused rates to drop in the second half of the year, though recent efforts have started pushing rates upward again

(Source : Shanghai Shipping Exchange )

: Shipping rates are expected to rise in the first quarter of the year due to the International Longshoremen's Association (ILA) strike and significant import tariffs. However, they are anticipated to stabilize later in the year as a result of an oversupply of shipping capacity and broader economic downturns.

(Source : SamsungSDS Brightics)

: In 2025, global economic slowdown, ongoing tensions in the Middle East, and the impact of high tariffs are expected to lead to a 2.5%p decline in cargo volume compared to 2024. Approximately 1.9 million TEUs of new deliveries are scheduled in 2025. While the supply is projected to decrease from 8.2% in 2023 and 10.3% in 2024 to 5.3% in 2025, oversupply in the market is anticipated to intensify.

(Source : Clarksons Research)

: The Shipping Industry is Starting a New the Shipping Alliance as a Big 4
- The restructuring of global shipping alliances has established the "Big 4" system. Gemini's 'Hub & Spoke' strategy is gaining attention for its potential impact on schedule reliability, port congestion, and freight rates.

: ILA Strike has come to an End, BUT there is Still a Spark
- The East Coast port strike has ended, but tensions over port automation persist, raising concerns of another strike. With January 2025 renegotiations coinciding with the Lunar New Year, careful monitoring of vessel space is crucial.

: Global tensions rise with Trump's new order after his re-election
- Protectionist trade policies involving tariffs are expected to disrupt global trade, causing a temporary rise in freight rates but ultimately leading to a decline in demand.

: 2024 average rates on Hong Kong-U.S. Route increased by 3.4% YoY. Driven by steady demand for E-commerce, China-U.S. route rates show continued growth, up by 16.8% YoY. Costs from Russia-Ukraine war impact passed to rates, China-Europe route shows highest growth at 19.6% YoY.

(Source : TAC Index)

: Air freight rates expected to rise due to new supply constraints compared to increased demand from new product, despite initial down factors.

(Source : SamsungSDS Brightics)

: Demand for air freight is expected to continue in 2025, driven by growth in e-commerce and semiconductor growth.
Belly supply is expected to increase in 2025 due to recovery in passenger demand, but supply growth is expected to slow from 8.6% in 2024 to 2.8% in 2025 due to production delays at the two major manufacturers.

(Source : IATA)

: Strengthening regulations to prevent abuse of the De Minimis for e-commerce
- Chinese e-commerce companies have grown rapidly through abuse of the ‘De Minimis’ system. It is expected that logistics strategies will be diversified from existing direct air transportation.

: Imbalance from Supply Shift
- Early November 2024: China–U.S. rate at $6.13/kg, U.S.–China at $1.00/kg, showing higher profitability from Asia. Profit-driven supply shifts widened November 2024 rate gap by six fold.

: Worsening Imbalance on Transpacific
- As of July 2024, cumulative rates from China surpassed 2019 levels, while U.S. rates remained at 2019 levels. Major airlines prioritize allocating supply to Asian routes to maximize profitability.

Market Intelligence [Nov. 2024] 2024 Review of Logistics and Outlook for 2025