Logistics Market Update November 2024

Logistics Market Update November 2024

November 2024

Monthly Highlights

U.S. East Coast Port Strikes: What to Know 

Port workers on the U.S. East and Gulf Coasts reached a temporary agreement in early November to avert a strike. While this provides short-term relief, tensions remain high, and further action may occur in January 2025, creating uncertainty for shipping operations. Shippers are rerouting cargo to avoid delays, leading to increased congestion at alternate ports.

Source: https://www.cbsnews.com/news/east-coast-port-strike-what-to-know/

Air Cargo Demand Surge Amid Increased Competition

Air freight demand remained strong throughout November, with airlines and freight companies adjusting schedules to meet the peak holiday season demand. However, growth showed as the global air cargo market saw only a 3% increase compared to the previous year. At the same time, global spot rates rose to $2.71 per kiogram, marking the fourth consecutive month of double-digit growth in air cargo rates. 

Source: https://www.aircargonews.net/airlines/air-cargo-demand-up-again-in-september-but-growth-narrows/

Supply Chain Disruptions from Hurricane Milton

Hurricane Milton disrupted shipping operations in Florida, particularly affecting Port Tampa Bay. Closures at the port caused significant congestion, increasing dwell times by 25%. Florida’s citrus industry was also severely impacted, with estimated crop losses of 30% and a 15-20% rise in prices. Shipping delays of 3-5 days are expected due to road closures and disrupted logistics.

Source: https://www.freightwaves.com/news/milton-threatens-ripple-effects-across-global-supply-chains

Key Takeaways

  • The threat of U.S. East and Gulf Coast strikes, although temporarily resolved, led to significant congestion at alternate ports. Container dwell times rose by 15%, and linehaul rates spiked by 8% in the impacted areas. 
  • Despite a slower growth rate in air cargo volume, rates continued to rise sharply, with global spot rates up by double digits for four months in a row. 
  • The logistics market faces mixed conditions, with tight capacity across certain segments like flatbed and reefer carriers, particularly in Florida and along U.S. coastlines affected by Hurricane Milton. The holiday season’s increased demand is also causing higher warehouse prices as retailers scramble for storage space. 
  • Overall Freight volumes in November were down 5.2% year-over-year. While some routes saw rate reductions, East Coast routes experienced a temporary rate increase due to potential labor strikes.

Ocean Freight Market Update

Rate Trends and Capacity Adjustments

Ocean freight rates on major trade routes displayed continued volatility throughout November. 

Increased capacity from additional loaders and alternative routing strategies, such as using the Cape of Good Hope, helped balance some capacity shortfalls. 

Despite added capacity, disruptions caused by the looming East Coast port strikes and labor disputes created temporary spikes in rates, particularly on the U.S.-Europe and U.S.-Asia routes. 

Market-Specific Insights

North Europe and Meditterranean: Rates declined further as peak season demand subsided and shipping lines competed aggressively on these routes. 

Asia-U.S. West Coast: Rates remained mixed due to competitive pressures and a focus on repositioning equipment to meet holiday season demand. 

South America: Capacity shortages led to a temporary increase in spot rates, exacerbated by delays at major Brazilian and Chilean ports. 

Environmental and Compliance Developments

Implementation of stricter IMO 2024 environmental regulations prompted some carriers to upgrade fleet technologies. However, the associated costs are expected to reflect in long-term freight rates. 

Congestion and Reliability

Global schedule reliability improved marginally, reaching 60%, but challenges such as port congestion and vessel delays persisted. Carriers responded with better planning and adjusted port rotations, but the improvements have not yet significantly alleviated supply chain disruptions. 

Air Freight Updates

Peak Season Performance

The holiday shopping season drove an uptick in air freight demand, especially for ecommerce and consumer electronics shipments. However, the following challenges influenced market dynamics: 

Capacity Constraints: Limited aircraft availability due to maintenance backlogs and crew shortages led to tighter capacity. 

Rate Increases: Global spot rates surged to $2.71 per kilogram, with some high-demand routes experiencing double-digit percentage rate hikes. 

Ecommerce Growth: Cross-border ecommerce shipments accounted for a larger share of air cargo volumes, with North America and Europe being key markets. 

Region-Specific Developments

Asia-Pacific: Strong demand for electronics shipments pushed rates higher, particularly on trand-Pacific lanes. 

Europe: Airlines faced capacity shortages due to increased demand for automotive and high-value industrial parts, contributing to regional rate increases. 

Disruptions and Delays

Weather Events: Hurricane Milton disrupted air cargo operations, causing shipment delays and congestion at key airports in Florida. 

Geopolitical Tensions: Conflicts in the Middle East disrupted air freight routes, forcing carriers to reroute flights, leading to extended transit times and increased costs. 

Technological Advancements

Airlines continued to adopt advanced cargo tracking systems, offering better visibility and improved service levels for high-priority shipments. 

Some carriers tested drones for last-mile deliveries in remote areas, showcasing future possibilities for e-commerce logistics. 

Freight Market and Amazon News

Amazon’s Air Freight Expansion

Amazon has been aggressively expanding its air cargo network, adding to new routes and increasing its fleet of dedicated aircraft, allowing Amazon to offer faster delivery times and increased capacity to third-party sellers.

Source: https://www.freightwaves.com/news/amazon-airline-sells-excess-cargo-capacity-to-third-party-shippers

Alibaba’s New Singles Day Focus

Alibaba’s annual Singles’ Day shopping event saw record-breaking sales, demonstrating strong consumer demand in China, highlightingthe importance of e-commerce, and the impact it has on global logistics and supply chain operations.

Source:https://www.scmp.com/tech/big-tech/article/3282703/alibabas-new-singles-day-focus-protecting-sellers-price-wars

Amazon AI Delivery Technology

Amazon is deploying AI-Powered delivery vans that use computer vision to streamline package identification and delivery, improving efficiency and reducing delivery times.

Source: https://www.supplychaindive.com/news/amazon-ai-delivery-technology-vapr/730138/

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