Global News Early Lunar New Year, tariffs, strike risk underpin Q4 strength in ocean freight

Waltham, MASSACHUSETTS — The confluence of strong pre-Lunar New Year cargo bookings, worries over new US tariffs and the potential for another work stoppage along the US East and Gulf coasts is expected to keep ocean freight demand elevated through the end of 2024, carrier and shipper sources say. Those bullish fundamentals will put a floor under spot rates during the fourth quarter and position the 2025 market for more potential rate increases, they say.

Speaking Wednesday at the Coalition of New England Companies for Trade (CONECT) conference in Waltham, Massachusetts, Don Davis, vice president at Zim Integrated Shipping Services, said the carrier expects strong demand for vessel space during the last two months of the year due to shippers trying to move cargo before Lunar New Year, which begins Jan. 29, about two weeks earlier than this year.

“This early Lunar New Year is expected to have an impact,” Davis said. “It’s likely to cause some stress in import capacity.

“We see our booking pattern increasing when we look at November and December,” he added. “It’s likely that there’s going to be some capacity constraints until the end of the year.”

About 5.4% of the total capacity into the US West Coast is forecast as of now to be blanked in November, according to data from maritime intelligence firm eeSea. The figure is about 8.1% on the East Coast. That’s down from the 11.5% blanked capacity observed in November of 2023 for ex-Asia imports into both regions.

November’s blanks are down sharply from 16% to the West Coast and 21% to the East Coast in October, according to the eeSea data.

With global schedule reliability hovering near 50%, Davis said blank sailings are necessary to get vessels back on a weekly rotation.

“It’s really operational in nature when we have to have blank sailings for the most part,” he said. “It has an impact on you, but certainly it’s not something we want to try and do. It’s a lost revenue move for us.”

The director of international logistics for a furniture retailer who asked not to be identified said that Lunar New Year closures are occurring across a broader swath of its Asian suppliers for longer durations. The retailer is looking to step up its imports over the next two months to get ahead of those closures.

“It used to be just for a week, now Lunar New Year might last two, three weeks,” the source said.

After falling almost without fail on a weekly basis since July, spot container rates have started November with gains. Platts, a sister company of the Journal of Commerce within S&P Global, assessed the North Asia to US East Coast spot container rate at $5,000 per FEU as of Nov. 5, up 17% from the last week of October. The rate to the US West Coast was pegged at $4,450 per FEU, a 7% gain. Tariffs, ILA deadline a concern Shippers are also starting to reckon with the tariff risk after the presidential election of Donald Trump, who has promised sweeping tariffs across all import goods. The logistics director said his company had two sets of purchase orders at the ready depending on which candidate came into office, with the election now forcing them to move more goods sooner based on the tariff threat.

A commercial account manager at the Port of New York and New Jersey who asked not to be identified said some retailers are expecting to increase their inbound freight volumes in the next quarter by 20% in response to the tariff threat.

Kim Supik, the international logistics director for discount retail Ocean State Job Lot, said during a CONECT panel discussion that importers still have time to get ahead of any new potential tariffs. She added that importers gained experience with Trump’s first round of tariffs in 2018 that should prepare them for any new tariffs after he assumes office again in January 2025.

”We currently have product that we make that is under tariffs that were initiated before. We’ve had to absorb them because what else are you going to do?” Supik said. “I think that the tariffs will come down all in one fell swoop.”

Some shippers may also be looking to move cargo ahead of a potential work stoppage at East and Gulf coast ports if a final deal between the International Longshoremen’s Association and the US Maritime Alliance is not reached by a Jan. 15 deadline.

Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said during the panel discussion that union and maritime employers are scheduled to start meeting in mid-November in hopes of reaching a deal ahead of the deadline.

“Everyone that I speak to at the ILA and USMX is acting in good faith and wanting to get this done,” she said.