International shipping prices are expected to continue to rise across the board by 2025
As of the end of this year, ocean freight rates outside of Asia have shown a slight upward trend overall, but with the approach of the Lunar New Year (LNY) and a series of January GRIs announced for trans Pacific routes, container prices on these routes may face upward pressure starting from 2025.
The seasonal demand decline that began later in February is expected to lead to a decrease in freight rates for routes outside of Asia, although the Red Sea diversion will keep freight rates much higher than the long-term average, just like in 2024.
The demand before the Lunar New Year will be combined with the higher than normal number of people entering the United States at this time each year. Due to many American shippers continuing to load goods ahead of expected tariff increases, the decline in cargo volume after the Lunar New Year may not be as significant as usual, as reflected in the record breaking cargo volume at Long Beach Port in November.
Since the outbreak of the Sino US trade war in 2017, China's imports from the United States have decreased, while Mexico's imports have increased. But at the same time, China's investment and trade in Mexico have surged.
Due to Mexican tariffs typically being lower than US tariffs, USMCA promotes low barrier trade between Mexico and the US, while the INMEX program allows many imported goods destined for the US to enter Mexico duty-free, resulting in many Chinese imports arriving in Mexico as a channel to enter the US market.
However, last week, Mexican President Reinbaum signed a bill that immediately raised the import tariffs on clothing from countries including China to as high as 35%. The bill will also essentially close INMEX's restrictions on certain categories of textiles and clothing, posing a challenge to importers who rely on these methods to reduce US tariff risks, including e-commerce sellers, for whom INMEX is a key factor in deciding to import through Mexico. In January, the government will also begin implementing stricter reporting requirements for B2C e-commerce imports.
In other recent developments related to the trade war, Panama has rejected President elect Trump's recent allegations of China controlling the Panama Canal.
Compared to last year's strong transportation volume, coupled with reduced capacity caused by the Red Sea, the transatlantic container freight rate in 2024 remains above the loss low of 2023, with prices around $2500/FEU since October.
Despite a 10% decrease in freight rates last week, the carrier still announced the imposition of a January interruption surcharge on the route in response to a possible strike by ILA in the middle of the month. Long term strikes will lead to congestion and disruptions, which may put additional upward pressure on the East Coast lanes in January.
In terms of air cargo, Freightos Aviation Index data shows that with the end of the peak aviation season, trans Pacific freight rates have dropped from a high of around $7.00 per kilogram in early December to $5.67 per kilogram last week. China Europe prices fell to around $4.25/kg after breaking through the $5.00/kg level earlier this month, while transatlantic prices dropped from a high of $3.16/kg in early December to $2.30/kg.