This week:
- US retailers say they expect Asia-US import surge to continue amid multiple challenges
- As negotiations stall, many industry observers say second ILA strike in January is likely
- Gulf Coast ports resilient throughout challenging 2024, plan to expand infrastructure
- Airline trade association says air cargo growth will slow in 2025 but remain strong
- FedEx CEO says freight division spinoff will be “seamless,” company recruits LTL experts
Year Closes With Asia-US Import Spike, Trend to Continue in Q1 ‘25
Earlier this year, the Red Sea crisis and anticipation of the October International Longshoremen’s Association (ILA) strike drove a months-long trend of US retailers frontloading imports. As 2024 comes to a close, concerns over another ILA work stoppage, an early Lunar New Year, and potential tariffs under the incoming Trump administration have driven an even higher surge in US imports from Asia.
According to S&P Global’s Ports Import/Export Reporting Service (PIERS), December has so far seen a 17.7% spike in Asia-to-US imports. Shipping costs have predictably soared, with spot rates reaching near-pandemic levels. Through mid-December, Asia-US West Coast short-term rates averaged $4,626 per FEU — more than triple the 2023 average of $1,519, according to S&P Global’s Platts.
Despite the new year bringing a potential second ILA strike at US East and Gulf Coast ports, Asian factory closures for Lunar New Year celebrations, and President-elect Trump’s promise of higher import tariffs, retailers expect import volumes to remain elevated overall in Q1 2025.
The National Retail Federation (NRF) forecasts a 12% year-over-year increase in US imports for January, a 4.1% drop in February due to the Lunar New Year shutdowns, followed by a 12.7% rebound in March. Meanwhile, the ongoing Red Sea conflict, forcing ships to bypass the Suez Canal for the longer route around Africa, is expected to continue impacting global supply chains and costs.
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Will ILA Strike Again in January? Many Industry Observers Say Yes
IIn October, the ILA agreed to a temporary contract extension with the United States Maritime Alliance (USMX), putting the union back to work at East and Gulf Coast ports through January 15. Since then, negotiations on a new, long-term master contract seem to have stalled. Given the massive impact of October’s three-day work stoppage on the global supply chain, the top question on the minds of many industry stakeholders is, “Will the ILA strike again in January?”
For many observers, the answer is yes. Supply Chain Dive recently compiled the opinions of several supply chain experts, and most expect a second ILA strike.
For example, Vespucci Maritime CEO Lars Jensen wrote in a LinkedIn post earlier this month, “All in all, the situation points in the direction of another strike.” Mike Short, President of Global Forwarding at C.H. Robinson, said, “As of right now, it is looking increasingly likely that the ILA will strike again in January. Negotiations have yet to resume, and both sides have released statements that suggest they are willing to allow another strike.”
Meanwhile, other observers are less sure another strike is certain. “I would say where we are now, it’s 50/50,” said AlixPartners Managing Director Brian Nemeth. Will Brucher, a professor of labor studies and employment relations at Rutgers University, said, “I think the (ILA) would only strike if there’s really…no possibility of coming to an agreement for either party.”
US Gulf Coast Ports Expand in Response to 2024 Container Volumes
With the second ILA strike deadline looming, US Gulf Coast ports are expanding in response to strong container volumes in 2024, driven by resilient consumer spending and retailer frontloading ahead of the October work stoppage.
According to PIERS data, the Port of Houston was the busiest of all Gulf Coast ports in 2024, with containerized imports increasing by 9.3% in the first 11 months of the year. Despite temporary closures due to a hurricane, a CrowdStrike outage, and the three-day ILA strike, Houston’s terminals maintained smooth operations, reflected in low container dwell times and efficient truck turnaround times throughout the year.
Looking ahead to 2025, Houston plans to implement infrastructure and process improvements. The port is testing a new appointment system for truck drivers, aiming for widespread adoption before potentially making it mandatory. Meanwhile, the Port of Mobile enhanced its capacity in 2024 with two new cranes, and it is currently expanding intermodal access.
Air Cargo Growth to Slow in 2025, Short-Term Outlook Remains Strong
Air cargo growth is expected to slow in 2025, but the year should still be positive for carriers, according to the International Air Transport Association (IATA). The airline trade association forecasts cargo volumes will reach 80 million tons, a 5.8% increase from 2024. This follows strong growth in 2024, with year-over-year increases of around 13%
The IATA’s projection aligns with other industry forecasts. Xeneta predicts 4% to 6% demand growth with capacity increases between 4% and 5%, while consultancy group Rotate estimates around 4% demand growth. IATA economist Ghislaine Lang noted that the strong 2024 growth is measured against a weak 2023, making it harder to maintain such high rates.
More than 50% of air cargo volumes from Asia to the US in 2024 were due to strong eCommerce sales. Large online marketplaces using direct-to-consumer fulfillment from China have become increasingly popular in the US.
FedEx CEO Predicts “Seamless” Transition in LTL Business Spinoff
Following FedEx’s recently announced plans to spin off its less-than-truckload (LTL) division, FedEx Freight, as a separate public company, CEO Raj Subramaniam said in an earnings call that the separation will be “seamless” for all involved.
Following the spinoff, FedEx Freight will retain its current name and maintain operational, commercial, and technological ties with FedEx, Subramaniam said. FedEx will continue to provide linehaul support to the new company, especially during peak shipping periods, since existing intercompany agreements already facilitate this cooperation.
To help ensure a smooth transition, FedEx Freight will begin expanding its sales force in January by recruiting more than 300 LTL specialists. The new hires will supplement 75 sales representatives who currently manage large accounts for the freight division.
Image Credit
Image by PublicDomainPictures from Pixabay
