U.S. port fees proposal, carrier alliances shift, and congestion
Potential new U.S. port charges on Chinese shipping companies
The U.S. Trade Representative (USTR) is considering imposing significant port fees on Chinese shipping companies and Chinese-built ships, potentially adding up to $1.5 million per port call. The USTR is accepting public comments through March 24, when it will hold a public hearing on the proposal. If approved and enacted it would impact U.S. imports, global trade, and various stakeholders in the shipping industry.
Ocean carrier alliance reshuffle in Q1 2025
Significant changes are underway for the east-west carrier alliance structure in early 2025. Here's a breakdown of the new alliance structures taking effect in February/March 2025:
MSC–Stand-Alone Service
MSC reached an unprecedented 19.8% share of vessel capacity in July 2024. They have a slot agreement with Zim on the Transpacific trade and another with the Premier Alliance on the Asia-Europe trade.
The Gemini Cooperation–Hapag and Maersk
This new agreement is designed as a hub and spoke network with few direct port calls, relying on feeder connections from central port hubs. The goal is to achieve over 90% schedule reliability, with a 4–5 month period to prove the concept. Extended transit times are expected to ensure the 90% on-time performance.
The Premier Alliance–ONE/YML/HMM
The remaining Alliance members have renamed their agreement the Premier Alliance. Their Transpacific (“TP”) Asia services will remain largely unchanged. They will partner with MSC for Asia-Europe services and with the Ocean Alliance for Transatlantic (“TA”) trade, mirroring current THE Alliance service strings.
HMM will participate in the TA trade for the first time from U.S. West Coast (USWC) to North Europe, while Evergreen will participate from U.S. East Coast (USEC) and U.S. Gulf Coast (USGC) ports, but not from USWC to Europe. Federal Maritime Commission (FMC) approval was received on Feb 10th, causing some delays in implementation.
The Ocean Alliance–OOCL/CMA/Cosco/Evergreen
This Alliance has extended their agreement for an additional 5 years through 2032. There will be no major changes to their current Transpacific services. They will partner with the Premier Alliance on the Transatlantic trade, reducing capacity on the TA trade.
Short-term effects
- Schedule reliability anticipated to diminish
- Increased blank sailings
- Port omissions as vessels are redeployed and traditionally direct services become indirectly routed
- Rate volatility
Long-term impact
- Discontinued individual port calls and traditional service strings
- Direct services get reworked as indirect going forward
- Extended overall transit times
With most carriers changing their service partners, especially on the Transatlantic trade, we can expect significant disruption to schedules in Q1 2025. Vessels could arrive on irregular dates, blank sailing weeks may be frequent, and port omissions could occur as services shift from direct to indirect. An estimated 8% of carrier capacity has been removed from the TP trade in February due to the reshuffle. Rate instability is expected as carriers attempt rate hikes in February-March 2025.
Port congestion and schedule reliability
Port congestion is escalating due to vessel diversions from the Suez Canal situation, adverse weather in Asia and Latin America, and shifting schedules from carrier alliance reshuffles. Major transshipment ports in Asia, Latin America, and the West Mediterranean are heavily impacted. North American ports, especially on the USWC (e.g. Los Angeles/Long Beach), are congested due to early peak season volumes and advance shipping before Chinese New Year (CNY).
The Port of New York is also congested due to an abundance of empty containers, with carriers prioritizing loading empties over export bookings to help work down the backlog of empty containers. Global schedule reliability has dropped from 54.7% in November to 53.8% in December 2024, 3% lower than December 2023.
Surge in refrigerated bookings
There is a significant shortage of refrigerated equipment in North America, especially at Houston, Tacoma, and Norfolk ports, due to a sudden increase in demand for refrigerated cargo. This growth is fueled by the expansion of the food retail sector, particularly supermarkets and convenience stores, which require advanced, energy-efficient refrigeration solutions.
Asia
Asia–Europe
Recent labor strikes at Rotterdam's Hutchison Port Delta II terminal have disrupted schedule reliability, while more broadly experienced congestion at major transshipment ports in Asia, such as Busan, Shanghai, Ningbo, and Singapore, is causing delays of 14-21 days. These disruptions are compounded by bad weather and high volumes at European ports like Rotterdam, Antwerp, and Hamburg. Additionally, the reshuffling of carrier alliances had led to schedule disruptions and blank sailings, impacting overall reliability.
Asia–U.S.
Market demand is slowly picking up after the CNY holiday across major Asia outbound trade, with spot rates trending down. The slower Trans-Pacific trade volume demand is partly due to front loading in November and December. With the alliance reshuffling in February and contracting negotiations starting in March, carriers may manage capacity to hold up spot rates. Routing via the Cape of Good Hope continues, as carriers await clarity on the Israel peace deal and guarantees of safety for crew and ships.
March vessel capacity outlook from Asia is higher than average to both West Coast and East/Gulf Costs. Demand recovery after the Chinese New Year Holiday remains slow and steady, with many anticipating a return to regular levels possibly back mid-March.
Europe
Spot rates on Asia-Europe trade continue to weaken, with rates to the Mediterranean trending down slower than to North Europe. Carriers aim to implement a rate increase on March 1 to prevent further declines. European port congestion may disrupt ships returning to Asia in the next two months, affecting capacity in April. This could be partially offset by the OCEAN Alliance’s new NEU7 service, adding 5% weekly capacity on the North Europe route.
Significant port congestion is occurring at core West Mediterranean ports such as Valencia, Algeciras, and Tanger Med due to volume diversions. Buyers remain watchful as EU emissions restrictions in 2025 are driving up ETS/Fuel EU surcharges. Meanwhile, full ships from China and bad weather are causing congestion at major EU ports like Rotterdam, Antwerp, and Hamburg, impacted by periodic strikes and work slowdowns at Rotterdam.
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
Congestion is persistent and most severe in the U.S. West Coast (USWC). Although the International Longshoreman’s Association (ILA) port strike risk was averted, it will take time to fully alleviate the effects of cargo diversion to the West Coast. Import volumes at USWC ports increased by 20-30% in Q4 2024 and continued in January 2025 due to an early CNY and potential new cargo tariffs, further contributing to congestion. Port congestion in Asia and at USWC ports has led to schedule reliability issues, exacerbated by carrier alliance reshuffling in Q1 2025, leading to blank sailings and port omissions.
Transshipment port congestion in Asia remains an issue, with approximate delays of 10-14 days at major ports like Busan, Shanghai, Ningbo, and Singapore. ONE has mandated that cargo from several US cities must move via USWC ports to balance rail activity. ZIM is omitting Haiphong port on their ZXB Express service for 7 weeks due to dredging, providing service via feeder from Yantian. Additionally, MSC has reinstated their Liberty service from USEC to Asia, offering a unique direct call from Philadelphia to Asia ports, with a rotation of Singapore, Shanghai, Busan, Miami, Savannah, Charleston, Philadelphia, and New York.
U.S.–Europe
In France, port workers went on strike in January and February, causing severe congestion at Le Havre and Fos Sur Mer. Appointments at these terminals are difficult to secure, with waiting times around 10 days. The next union meeting on February 24 will determine if the strike continues.
In Rotterdam, a mid-February strike at Hutchison Port Delta II terminal, combined with weather and service changes, has led to high vessel waiting times. European ports such as Rotterdam, Antwerp, and Hamburg are experiencing reduced traffic due to declining exports. Additionally, geopolitical tensions and potential trade tariffs are creating uncertainty, particularly at the Port of Rotterdam. These disruptions are compounded by ongoing congestion at key transshipment hubs and regulatory shifts affecting supply chains.
U.S.–LATAM
Schedule reliability to East Coast South American (ECSA) ports has been diminished by delays at southern Brazil ports like Navegantes and Rio Grande, leading to blank sailings and port omissions. Many carriers are choosing to omit these ports and transshipping via Santos or other ports. Additionally, carriers are diverting vessels due to past flooding and ongoing construction, causing congestion to spread to Itapoa and Paranagua.
Space from USGC to ECSA and West Coast South America (WCSA) ports has tightened up due to delays at transshipment ports and southern Brazil ports. Congestion at southern Brazil ports has increased transshipment cargo volume, causing delays at transshipment ports in Panama, Caucedo, Cristobal, Cartagena, and Kingston.
U.S.–South Asia, Middle East, Africa (SAMA)
Monthly rate increases have been occurring due to service instability and tight vessel space. Space from USEC and USGC ports to Indian Sub-Continent (ISC) and Mediterranean (ME) trades is impacted by vessels diverting via the Cape of Good Hope, increasing transit times and causing blank sailings. Services to Red Sea and Persian Gulf ports are suspended with many carriers, leading to congestion at West Med port hubs. Transshipment hubs in the ME/ISC region, such as Jebel Ali, Abu Dhabi, Mundra, and Colombo, are also congested.
There is a shortage of space on the USEC/USGC to ISC trade due to low import demand from ISC to the USA, while export volumes are strong. Limited services from USWC to the SAMA region are impacted by Asia port congestion. Direct services via Hapag/ONE/YML PS3 to India are full, requiring bookings 4 weeks in advance. CMA/MSC and Cosco offer service to the Middle East from USWC ports.
Turkon will start service between USEC ports and Mundra/Nhava ports in India via Turkey in March 2025. MSC’s service string will no longer call Port Qasim directly, using Salalah for transshipment instead. The new port rotation includes Jebel Ali, Pipavav, Nhava Sheva, Salalah, Algeciras, Newark, Charleston, Savannah, Houston, Norfolk, Newark, Algeciras, and Salalah.
U.S.–Oceania
Space remains tight with direct carriers, but with peak season winding down, lower demand is expected in Q1 2025. Regular U.S. East Coast (USEC) and Australian (AU) port omissions during Q4 2024 and into Q1 2025 are causing tight space to persist, due to delays at U.S. ports and adverse weather at AU ports. This has led to carriers cutting port calls to catch up on schedules and make Panama Canal appointments. Delays on transshipment services via Asia into Oceania are expected due to congestion at Asian transshipment ports.
Brown Marmorated Stink Bug (BMSB) season remains in effect for cargo sailing from North America ports until May 2025, requiring fumigation for applicable commodities.
Canada
Tariffs and winter conditions are hampering operations and capacity, as companies rushed to ship products to avoid new U.S. tariffs that went into effect March 4. Three massive snowstorms impacted Ontario and Quebec over the past week, causing supply delays and snowed-in yards for many carriers. One-day trips turned into three-day journeys, affecting supply chains. Approximately 70% of Canadian carriers are in these affected regions, with Quebec experiencing its heaviest snowfall in 127 years. The recent holiday in Canada compressed a five-day workweek into four days, increasing demand.
Liquidity is king as carrier bankruptcies are rising as banks call in loans, with many carriers struggling to make payments after purchasing equipment and land during market highs. Driver absenteeism is notable, with over 60% of drivers in Canada from Southeast Asia, often returning home from January to March.
South America
LATAM
Colombia
Carriers such as CMA CGM, COSCO, and Hapag Lloyd have stopped bookings to Norfolk from Buenaventura due to congestion. King Ocean and COSCO face container shortages, affecting exports. MSC has restored export services to the USA, while Hapag Lloyd is promoting new routes from Cartagena to the U.S. West Coast and other destinations.
Peru
Hapag Lloyd has no space on vessels from Callao to Miami and New York until early March. ONE reports severe congestion at Callao port, with limited capacity until mid-March. Transshipment services are being offered to cover routes.
Chile
SEABOARD is expanding services with direct calls in San Antonio, focusing on refrigerated cargo. MSC announced a peak season surcharge (‘PSS”) for exports from Chile to various destinations, effective March 1. Hapag Lloyd faces space constraints for exports to North America, Central America, and Colombia.
West Coast South America
COSCO launches new services to enhance exports to Asia from Chile and Peru. Hapag Lloyd is using Charleston instead of Savannah due to integration with Maersk.
Brazil
An ongoing fiscal auditors' strike is affecting customs clearance. Southeast and Southern ports are over capacity. Summer rainy season starts in March, and ocean schedule instability persists due to port congestion.