Shipping alliance changes add to congestion
U.S. East and Gulf Coast labor agreement
The International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) reached a labor agreement in early January, prior to the previous agreement’s expiration. This tentative agreement averted a potential labor strike, but the impact to supply chains (in terms of volumes and routing) is still normalizing.
Major shipping alliances in flux
MSC and Maersk are ending the 2M Alliance. Starting in February 2025, MSC will operate independently but form space agreements with other carriers, including ZIM and the Premier Alliance. Maersk will join forces with Hapag to create the Gemini Cooperation, a new vessel sharing agreement.
THE Alliance will also break up, with Hapag leaving to join Maersk. The Premier Alliance will continue with minimal changes and partner with MSC and the Ocean Alliance. The Ocean Alliance extended its agreement through 2032, maintaining current services, but reducing capacity on the Trans-Atlantic trade lane.
The 2025 carrier alliance changes may cause short-term shipping disruptions, including irregular vessel arrivals, more frequent blank sailing, and increased port omissions. Rate instability will likely persist due to the impacts on schedules and tight space.
Long-term, these changes could mean discontinued routes and port calls, shifts from direct to indirect service, and longer transit times. These disruptions may require shippers to review and reassess requirements to align with the new alliance structure.
Port congestion is a significant issue
Vessel diversions from the Suez Canal, adverse weather in Asia and Latin America, the averted U.S. port strikes, and shifting vessel schedules from changing carrier alliances are all contributing to congestion and delays. Major transshipment ports in Asia, LATAM, and the west Mediterranean are experiencing congestion, and North America ports, especially on the U.S. West Coast (USWC), are also congested due to early peak season volumes and advance shipping before the Lunar New Year.
The most recent schedule reliability data continues to hover at 53.8%. Maersk and MSC have the highest reliability with 61.9% and 54.8% on-time performance, respectively, while Wan Hai is the lowest at 47.3%.
Asia
Asia–Europe
Goods moving from Asia to Europe face significant disruptions due to severe port congestion and adverse weather conditions. Key ports in Asia, including Shanghai and Ningbo, are experiencing significant delays, with over 120 vessels anchored off these ports awaiting berths.
In Europe, ports like Hamburg, Rotterdam, and Le Havre are struggling with labor shortages and high volumes of traffic, leading to berthing delays of up to 10 days. The ongoing Red Sea crisis has forced many vessels to reroute around the Cape of Good Hope, further increasing transit times and shipping costs. Expect these disruptions to persist into February.
Asia–U.S.
Key ports in China, including Yantian and Shanghai, are experiencing significant delays as factories rushed to ship goods before the Lunar New Year and U.S. tariffs. In the United States, ports like Los Angeles and Long Beach are challenged by high volumes and weather-related delays, leading to extended wait times and increased shipping costs. Expect these disruptions to persist into February.
Europe
Expect delays due to the reshuffling of the three alliances to impact schedules when shipping to and from Europe. The recent U.S. tariffs on goods imported from China will likely increase demand on the Trans-Atlantic westbound routes. Similarly, a dormant dispute over the Panama Canal between the United States and Panama could result in disruptions at the canal.
Shipments out of Europe are facing significant challenges. The Asia–Europe trade lane is under severe pressure, with key ports like Rotterdam, Hamburg, and Antwerp experiencing congestion and delays. Stricter emissions standards and potential tariff changes are reshaping shipping practices, adding to the complexity of operations.
Mediterranean/India
Shipping routes between the Mediterranean and India continue to adapt and evolve. Carriers are optimizing schedules and reallocating vessels to meet the high demand, ensuring more reliable and efficient services. The introduction of new direct services and strategic adjustments in port calls helps mitigate congestion and delays.
North America
U.S.–Asia
Routing on the USWC has been under pressure caused by cargo diversions created by the threat of the ILA strike in January. Although an agreement was reached and the strike risk averted, congestion will take time to ease. Plus, an early Lunar New Year and the anticipation for new tariffs caused larger than expected volumes on the Trans-Pacific eastbound trade lane in the last quarter of 2024 and early 2025.
The increased volumes at USWC ports have increased by 20–30% compared to 2023.Asia and USWC port congestion, worsened by the 2025 carrier alliance shifts and severe typhoon season, is creating significant shipping delays. Blank sailings and port omissions are increasing. Asia transshipment hubs face delays of 10–14 days at major ports like Busan, Shanghai, Ningbo, and Singapore.
Carriers are adjusting accordingly. ONE has mandated cargo from several U.S. cities must move via USWC ports to balance rail activity. ZIM is omitting Haiphong port on their ZXB Express service for seven weeks due to dredging and instead is providing service via Yantian port. MSC has reinstated their Liberty service from USEC to Asia, offering a unique direct call from Philadelphia to Asia.
U.S.–Europe
Overall vessel space from USEC and USGC ports is much tighter due to planned blank sailings and carrier alliance reshuffling in Q1 2025. With the Ocean Alliance and Premier Alliance merging their services on the Trans-Atlantic trade lane in February 2025, capacity is diminished even further. Carriers are overbooked on all-water services from USWC ports, with Hapag exiting and the Ocean Alliance joining this service.
Significant port congestion is occurring at key West Mediterranean ports due to volume diversions and recent severe flooding in Valencia. MSC Canada has discontinued its direct call at Naples, replacing it with Salerno. The AL5 service has been omitting Saint John since October 2024, and the Premier Alliance will no longer offer Saint John or Halifax calls once Hapag leaves.
U.S.–LATAM
Schedule reliability to East Coast South America (ECSA) ports is impacted by delays and congestion at southern Brazil ports, leading to blank sailings and port omissions. Heavy rains have worsened the situation, causing carriers to transship via Santos or other ports. Space from USGC to ECSA and West Coast South America (WCSA) ports is tighter due to delays at transshipment and southern Brazil ports. Increased transshipment cargo has led to congestion at key ports.
CMA and COSCO have changed their BRAZEX service port of call from Navegantes to Imbituba. MSC, Hapag, and Maersk have extended the suspension of their SEAC String 1/UCLA service at several ports. MSC will discontinue Freeport on their SAEC service, adding Caucedo instead.
U.S.–South Asia, Middle East, Africa (SAMA)
Shipping rates in India and the Middle East are rising due to unreliable service and tight vessel space. Vessel diversions around Africa, caused by Red Sea/Persian Gulf service suspensions and increased piracy off Somalia, are lengthening transit times and increasing canceled sailings.
Regional transshipment hubs are severely congested, worsened by bad weather in India. While USEC/USGC to India space is tight, new Hapag and CMA services are establishing additional space and capacity.
USWC to South Asia services are impacted by Asia port congestion, and severe weather near the Cape of Good Hope affects services between South Africa and North America, with significant congestion at South Africa ports. MSC MECL service will switch to transshipment via Salalah port.
U.S.–Oceania
While lower demand is anticipated as Q1 2025 progresses, space remains tight to Australia due to ongoing U.S. and Australia port delays, along with adverse weather. Expect transshipment service delays from Asia into Oceania caused by congestion at Asia transshipment ports.
Brown Marmorated Stink Bug (BMSB) season regulations are in effect in Oceania. Cargo sailing from certain countries require fumigation for applicable commodities. These regulations go into effect each year starting September 1.
Canada
After the holiday season, the Canada freight market shifted, making southbound loads more desirable while northbound freight piles up with limited capacity. Recent U.S. snowstorms have constrained operations further, and capacity is shrinking. The capacity constraints are enhanced this time of year because many South Asian drivers, who make up a significant portion of Canada’s driver population, travel home for the winter. This has led to elevated prices as carriers cherry-pick optimal freight.
A potential for a Canadian Pacific Railway workers' strike and the threat of a potential 25% tariff on Canada goods shipped to the United States creates further uncertainty for cross-border freight movement.
South Asia, Middle East, Africa (SAMA)
Lunar New Year will lead to post-holiday delays, especially on Asia–India routes. Expect tight space, increased rates, and blank sailings.
Recent vessel calls on the U.S. and Europe connections at Nhava Sheva and Mundra have been behind schedule by up to 12 days, with equipment shortages exacerbating the situation. The launch of the new IOX service by ONE/YML/HMM from India to North Europe in February 2025 under the PREMIERE Alliance consortium may mean more service options for the region. Overall, capacity remains stable from India to all sectors, but Asia–India routes will face significant pressure.
The ongoing Red Sea conflict continues to disrupt shipping, causing longer transit times and higher costs as carriers reroute via the Cape of Good Hope. Accordingly, key ports like Jebel Ali and Salalah are experiencing congestion. The recent ceasefire agreement between Israel and Hamas brings some hope for stability, but the security risk remains high.
Shipping out of Africa faces port congestion and delays. South Africa's Richards Bay Coal Terminal saw a 10% increase in exports in 2024, but rail improvements are still needed. Ports like Durban and Cape Town are experiencing delays due to adverse weather conditions and infrastructure issues. Additionally, the Suez Canal extension, expected to be operational in Q1 2025, may alleviate some congestion.
South America
LATAM
LATAM shipments are experiencing high demand and rising rates as capacity is not growing at the same pace. Key trade lanes into LATAM had a strong finish to 2024 and the upcoming months will determine if demand cools down to match historical cycles.
Currently, there is some availability in capacity, but rates remain high as carriers try to maintain revenue levels. The last two weeks of January experienced peak volumes due to the Valentine floral season. Additional capacity was deployed in Colombia and Ecuador markets. In Brazil, softer volumes at the beginning of the year provided some relief to the congestion at Guarulhos (GRU) terminal, but the situation is still tight.
Ocean shipments from LATAM to the United States are experiencing tight space and high rates due to strong demand and limited capacity growth. Key ports impacted include Santos, Rio de Janeiro, and Paranaguá in Brazil, as well as Cartagena in Colombia and Callao in Peru. The congestion at these ports is exacerbated by delays at transshipment hubs and adverse weather conditions. Expect the situation to remain challenging in the coming months as carriers adjust their schedules and capacity to meet demand.
Oceania
North America
While ports remained open and operational during labor negotiations, market conditions on the USEC grew congested, made worse by weather events and delays through the Panama Canal. Pricing and transit times are still disrupted.
Europe
While shipping lines are evaluating recent ceasefire agreements in the Red Sea region, many are still rerouting around the Cape of Good Hope.
The Europe to Oceania trade lane is in a slower period with reduced schedule reliability due to port congestion, bad weather, and blank sailings. This is leading to potential backlogs and extended dwell times in Asian transshipment ports. Rates are likely to remain stable until the end of February.
Asia
Carriers' attempts to increase prices in January were thwarted by lower-than-expected pre-Lunar New Year demand. Rates to Australia’s East Coast dropped significantly, while other destinations saw smaller decreases. Carriers still expect some form of peak season surcharge as new/additional charges negotiations commence.