Cancelled sailings and shifting shipping line alliances

The ocean freight market is undergoing significant changes as carriers respond to ongoing disruptions and shifting demand patterns. While the recent strike at US East Coast ports was resolved within three days, its effects continue to ripple through the industry, with vessel backlogs and port congestion adding strain to an already volatile market. As peak season demand increases, carriers are turning to capacity control measures to stabilise freight rates, which have been fluctuating throughout 2024.

October saw carriers struggle to manage freight rates, particularly after China’s Golden Week, a traditionally slower period. Despite a 20% reduction in capacity on the Asia-North Europe trade lane, rates remained relatively low during the post-holiday slowdown. However, further capacity cuts are anticipated, and these reductions, particularly through blank sailings, are expected to drive rate increases as demand picks up in November.

Capacity cuts and rate adjustments
In response to the downward pressure on rates, carriers are implementing more aggressive strategies to control capacity. These moves, especially on major routes such as Asia-North Europe, are designed to tighten supply and increase rates as the holiday season approaches. Although many Christmas shipments have already been completed, General Rate Increases (GRIs) are planned for November. The success of these hikes, however, will depend on how effectively carriers can manage capacity over the coming weeks.

Alongside these short-term measures, structural changes are on the horizon. The planned dissolution of the 2M alliance between Maersk and MSC in 2025 will reshape the market, with new alliances like the Gemini Cooperation and Premier Alliance emerging to streamline services on key trade lanes, including Asia-Europe. These shifts may also lead to changes in port calls, potentially affecting direct connections to key hubs as carriers reconfigure their networks.

Ongoing congestion and delays
Despite some easing of earlier delays, capacity constraints remain a challenge in certain regions, with vessel bunching and supply chain congestion continuing to impact global operations. In October, 10% of the global fleet was reported waiting at anchorages—the highest level outside of the pandemic—highlighting the ongoing disruptions in the market. Schedule reliability remains volatile, particularly on Asia-Europe and Asia-Americas routes, where key ports such as Shanghai and Ningbo continue to experience congestion.

Freight rates have fluctuated throughout 2024, influenced by a range of factors including strikes, rerouting delays, and shifting demand patterns. While rates have risen slightly on some routes since Golden Week, they remain well above 2023 levels. Carriers have also introduced surcharges to offset the costs associated with recent disruptions, although the Shanghai Containerised Freight Index (SCFI) has declined from its July peak.

Looking ahead
As the year draws to a close, demand for ocean freight is expected to soften. However, with capacity cuts, schedule volatility, and unpredictable peak season dynamics still in play, the market remains challenging for shippers. It is more important than ever for shippers to plan ahead, share forecasts, and secure space on vessels to ensure supply chain efficiency during this turbulent period.

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