Shipping Delays and Challenges to Continue in New Year
CoffeeNetwork (New York) – As players in the coffee market return to their desks in the New Year, continued logistical challenges is the topic on everyone’s mind.
Going into the holiday season, data shows that shipping rates increased throughout December, with transpacific rates rising more than 15% in 30 days.
On top of soaring rates, availability for both containers and vessels continue to plague the coffee market. Shipping of coffee is generally high around this time as demand during the northern hemisphere winter increases, but now, the added uncertainties surrounding President-elect Trump’s tariff increases have prompted an increase in exports.
Possible US Port Strike
In the US, the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) will meet tomorrow in hopes of coming to a resolution just days before the contract extension expires on January 15, 2025. Should no resolution be met, a strike at US East coast and Gulf coast ports is possible. According to numerous reports, shipping have already made contingency plans and have begun using alternative ports. Data from the Port of Long Beach, California shows six consecutive record-breaking months of cargo activity.
Global shipping giant Maersk posted a statement on its website, highlighting the uncertainty surrounding the labor situation and the potential impact on port operations. With the possibility of a strike on the horizon, the company is taking proactive steps to mitigate the disruptions and ensure that its supply chain remains as unaffected as possible.
Lunar New Year
In Asia, more specifically, Vietnam, the Lunar New Year, Tet, begins at the end of this month. Generally, coffee exports jump ahead of the holiday.
Maersk has warned customers delays and disruptions have created gaps in its Asia-North America network, forcing it to blank, or cancel, voyages on a half-dozen Asia-North America services. This will negatively impact available capacity potentially resulting in increasing ocean freight charges.
Equipment shortages at ports in Vietnam have already been reported. Real time port congestion data shows all ports in the country are operating with delays: from a 2-day average at the Saigon port (VNSGN) to a 16-day average at the Qui Nhon port (VNUIH).
European Labor Shortages
Labor shortages at the port of Hamburg are causing berthing delays of up to 10 days for ships operating Asia-Europe services for THE Alliance, according to sailing schedules released by ONE. Other major European ports, such as Rotterdam and Genoa, have also reported congestion and labor issues.
Ports throughout the region also closed in observation of Christmas and New Years, and backlogs from these closures have added to delays.
Carrier Alliance Reshuffling
Some of the largest carriers will be reshuffling alliances starting in January.
The Premier Alliance will be made up of Ocean Network Express (ONE), HMM, and Yang Ming that aims to offer end-to-end direct port container services across the transpacific trade route and Asia-Europe trade lanes. The five-year alliance will focus on key East-West trade lanes, including Asia-Europe, Asia-North America, and Asia-Mediterranean routes. Premier Alliance will also partner with MSC in the Asia-Europe trade starting February 2025, offering nine services that aim to boost direct port coverage and vessel sailings.
The Gemini Cooperation has already started accepting cargo bookings as of December 3rd. This alliance saw Hapag-Lloyd and Maersk enter into a new long-term collaboration. They have reported that they intend to provide alternative solutions if Red Sea disruptions continue, which would see both shipping giants either returning to the Trans Suez Canal or continuing the alternative route around the Cape of Good Hope.
The Ocean Alliance: The Ocean Alliance — launched in 2017 — comprises COSCO Shipping, Evergreen Line, CMA CGM, and OOCL. The group has signed an extension of its agreement to March 2032.
2025 will also see the dissolution of the 2M Alliance between Maersk and MSC, the former, which will now act as a “one man show.”
Cargo and logistics analysts anticipate these changes could cause disruptions and extra fees at first, but could eventually lower rates due to increased competition.
So What Will This Mean for 2025?
So much remains to be seen. How will Trump’s proposed tariffs impact global shipping? Will the ILA strike in the US? Will Red Sea attacks continue?
The latest forecast from the International Monetary Fund (IMF) projected that inflation should decline from 9.5% year on year in Q3 2022 to 3.5% by the end of 2025, slightly below the pre-pandemic average of 3.6% between 2000 and 2019. With lower inflation, and the possibility of strong growth in major consuming markets, such as the US, the demand for coffee globally is likely to grow. Coffee roasters will need to adapt to the increasing uncertainties surrounding the globe’s logistics, and strategically account for possible delays. New alliances in shipping could ease costs as competitive pricing becomes a reality.
Alexis Rubinstein
