Trans-Pacific

The strains to the extended container shipping system amid the ongoing Red Sea disruption are showing again, largely due to higher-than-expected demand in Europe and the US for Asia imports.

Clothing imports are rebounding in 2024, but retailers will likely wait for clear signs of demand growth to bring in additional product after a double-digit percentage drop last year.

The tie-up is part of a wider move by individual members of THE Alliance to broaden their respective networks and maintain alliance commitments without adding a replacement carrier to succeed Hapag-Lloyd.

The jump in spot rates comes as factories in China saw an increase in purchase orders in April while strong US imports are expected to continue into May.

The launch of the new services comes amid an investment boom by Chinese companies in Mexico as part of wider US nearshoring efforts that include Central and South America.

One of the worst-affected facilities is the Shanghai East Container Terminal, where there are delays of up to seven days, Maersk said in an advisory this week.

The carrier has pledged to remain loyal to its core container shipping segment but at the same time is rapidly expanding its terminal business and increasing its share of inland transport capacity.

With Asia-Europe services already served by 12 weekly flights out of Paris, the addition of an Asia-US network will fill a crucial gap in the airline’s global coverage.

The new partnership expects to have enough containers positioned at its major hub ports to keep ships full on its mainline trades, thus eliminating the need to unexpectedly cancel a voyage due to a lack of demand.

But the port has an action plan in place to win back business, including development of a green bunkering hub, digitizing port operations and boosting multimodal connections.

The import strength goes beyond restocking, showing the impact of a recovery in housing and the US manufacturing resurgence, writes Peter Tirschwell.

Ocean carriers have signaled their belief that US consumer buying will remain strong into the second half of the year by announcing the launch or restart of 11 services involving the trans-Pacific and north-south trades.

Growing US import volumes and market share from India, coupled with a surge of investment from major big box retailers and manufacturers, suggests a tipping point for connecting ocean trades and the country.

Carriers in the eastbound trans-Pacific have concluded 2024-25 service contracts with several of the largest US retailers at rates that are significantly higher than in last year’s contracts as carriers leveraged today’s relatively high spot rates.

The decision underscores that ship diversions around Africa’s Cape of Good Hope will likely last through at least the first half of 2024, if not longer, as carriers see no short-term resolution to the uncertain security situation in the region.

Container lines are increasing capacity to a 17-month high in May and have pulled back on their blank sailings to adjust to longer transits due to Red Sea disruptions.

ONE and Yang Ming say the partnership will maintain most of its existing services into next year as it readies for a direct-call model and “speed buffers” to boost schedule reliability.

With the fifth-largest container port on the US East Coast now effectively isolated from waterborne traffic, the collapse of the Francis Scott Key Bridge after it was struck by a container ship will, at least temporarily, reconfigure the region’s supply chain.

Maersk is the first container line to publicly promote a direct pipeline of ocean freight to what’s known as Section 321 shipments, though the model has been used for years by freight forwarders.

The carrier said the restored TP20 service will offer “competitive” transit times just as shippers need to ensure products are in stock for spring and summer.

US imports from Asia last month were up 40% over February 2023, the biggest year-over-year jump for any month since May 2021.

This year’s annual service contract negotiations are occurring amid the latest disruption in container shipping as vessels divert away from the Red Sea and Suez Canal to avoid possible attacks by Houthi militants.

The entry of Hede International in the eastbound trans-Pacific comes as US imports from Asia have been rising on a year-over-year basis since October.

Hapag-Lloyd's CEO insists the total cost of the network will be lower because Gemini will be able to better utilize controlled assets and deliver more efficient cargo connections in the hub and spoke model.

The carrier, after steadily increasing its coverage on trade lanes between Asia and North and South America while building its fleet and volumes, aims to leverage that market strength into new slot-sharing agreements.

Brightening prospects of Asia import growth in the first half have pushed container lines to significantly increase Asia-US West Coast capacity, writes Journal of Commerce Executive Editor Mark Szakonyi.

The Israel-based carrier is expecting a significantly improved 2024 driven by a larger and more efficient fleet, new services and double-digit growth in volumes.

In a sign of confidence in consumer demand, Global Port Tracker expects US imports for the first six months of the year will be up 7.8% compared with the first half of 2023.

The crisis has been a logistical headache for container lines, but overcapacity in their fleets is enabling them to cover the loss of effective capacity being used up by the longer transits around southern Africa, Lars Jensen told TPM24.

Even as the industry seemingly adjusts to the new status quo of routing ships around southern Africa, there are significant — yet less apparent — changes afoot in container shipping, writes Journal of Commerce Executive Editor Mark Szakonyi.

A drop in schedule reliability was expected on trade lanes such as Asia-Europe and Asia-US East Coast, but the diversions around southern Africa have also affected routes not directly connected to the Red Sea.

The move has already prompted Busan, one of the ports most affected by the downgrade, to urge Maersk and Hapag-Lloyd to rethink their Gemini vessel schedules and restore some calls at the South Korean gateway.

Al Pierce was a shipping veteran who headed up ocean carrier rate-setting conferences and later the so-called “discussion agreements” in the trans-Pacific trade beginning in the late 1980s.

Matson said its trans-Pacific volume outlook for 2024 is roughly flat with last year owing to modest growth in its Jones Act business and little impact yet from other supply chain crises.

The fourth consecutive month of year-over-year growth in US imports from Asia might be a sign the world’s busiest trade lane has turned the corner after a lackluster 2023 in which imports declined about 13%.

The new partnership with Wan Hai comes as ONE — along with Yang Ming and HMM — faces the loss of THE Alliance partner Hapag-Lloyd, which is leaving the vessel-sharing agreement for a new partnership with Maersk.

Highlighting how things have improved to some extent, Hapag-Lloyd said THE Alliance has restored transits through the canal on some of its trans-Pacific to US East Coast EC2 services.

The huge order book due to be delivered through 2024 is helping ocean supply chains withstand the Red Sea crisis, experts say, but another shock would cause a “pandemic-type crisis.”

The Global Port Tracker calls for a year-over-year gain of 5.3% in US imports over the first six months of the year despite the uncertain security situation in the Red Sea.

While current elevated rates would normally give ocean carriers leverage in annual service contract negotiations, spot rates will likely come down after the pre-Lunar New Year rush and the market is still uncertain about how strong demand will be in the second half of the year.