December 2024 Logistics Update: Port Strikes, New Shipping Routes, Air Freight Trends, and More

Captain’s Log

We are on the fast track to a festive holiday season! With only 12 days left until Christmas and Hanukkah, it’s almost time to cherish moments with family and friends and reflect on the many blessings 2024 has brought us.

Every year brings its ups and downs, but as Steve Jobs once said, “the only way to do great work is to love what you do”. My team and I love what we do! We embrace the highs and learn from the lows, driving us to strive for even greater success for our clients and partners. We appreciate each and every one of you – including those who have yet to experience the exceptional value our team can bring!

From all of us at Southern Star Navigation….Merry Christmas & Happy Hanukkah! Bethany 🌎 Gabbett

East & Gulf Coast Port Strike Uncertainty

Talks Stall as Trump Weighs In

The temporary agreement between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) is set to expire on January 15, 2025, with no resolution yet in sight. Earlier this month, negotiations reached a standstill as the ILA walked away from talks over concerns about automation and its impact on American dockworkers’ jobs.

In a new twist, incoming President-elect Donald Trump has publicly voiced his support for the ILA’s stance against increased automation. In a statement shared on social media, Trump emphasized his opposition to replacing American workers with machinery, calling on foreign companies operating in the U.S. to prioritize hiring American dockworkers instead of relying on automation. He declared this issue a personal priority, signaling that his administration may take a firm position in favor of protecting longshoremen’s jobs.

This development puts added pressure on the USMX to reconsider its position on automation in future negotiations. East and Gulf Coast ports are critical to U.S. supply chains, handling nearly half of the country’s imports. If a new agreement isn’t reached, a strike could disrupt billions of dollars in trade and lead to widespread delays and shortages.

As the January 15 deadline approaches, all eyes are on the incoming administration and whether Trump’s statements will influence negotiations. Businesses relying on these ports should prepare for potential disruptions while closely monitoring further developments.

Indian Port Workers Plan Indefinite Strike

Wage Disputes Prompt Action

The threat of a major strike by Indian port workers has not yet ended, and uncertainty looms as the December 15 deadline approaches. Dockworkers at India’s 12 government-owned ports are preparing for an indefinite strike starting December 17, 2024, if their demands for wage revisions and productivity-linked rewards aren’t met.

The unions are pushing for an 8.5% wage increase, backdated payments, and full implementation of the labor agreement settled in August 2024. Delays in formal approval have reignited tensions, with union leaders warning they will continue strike preparations unless the settlement is officially enacted.

Government officials are reportedly working to finalize the agreement and issue a formal order soon. However, union representatives have made it clear that without a formal resolution, they will move forward with their strike plans.

If the strike happens, operations at state-run ports will be heavily affected, disrupting cargo flow for industries relying on these facilities. Private ports like Mundra and Hazira are expected to stay operational, helping to offset some of the impact.

The situation remains fluid, with critical updates expected in the coming days. Businesses dependent on Indian ports should monitor developments closely and explore alternative logistics solutions to minimize disruptions.

Air Freight Adjusts to Global Challenges

Demand Rises Amid Disruptions

The global air freight sector has seen increased demand in recent months, driven by geopolitical tensions and disruptions in ocean shipping, including port strikes. With delays at major seaports, businesses are turning to air cargo to maintain supply chain continuity. This shift has led to a surge in charter operations, as companies prioritize speed over cost to meet delivery deadlines. However, this growing demand is straining available capacity, particularly during the busy holiday season.

Adding to the challenge, geopolitical instability has restricted certain air routes, pushing carriers to adapt their networks. Capacity constraints are further amplified by higher fuel costs and a limited number of widebody aircraft available for cargo operations. Despite these obstacles, air freight remains a crucial solution for industries requiring time-sensitive deliveries, such as electronics and healthcare.

Charter Operations and Rate Trends

Charter services have become a lifeline for shippers seeking flexibility, especially during port-related disruptions. Rates for charters have climbed significantly due to the limited availability of aircraft, with some routes seeing double-digit increases. Standard air freight rates have also risen, reflecting higher demand and operational costs.

Looking ahead, industry analysts expect the air cargo market to stabilize as new aircraft enter the fleet and global tensions ease. In the meantime, businesses are advised to plan for higher freight costs and explore diversified logistics strategies to mitigate risks. With air freight proving its value as a reliable alternative, its role in global trade is only set to grow.

Trucking Industry Faces Capacity Crunch

Tight Market Conditions Persist

The U.S. trucking market is facing a capacity crunch as demand for freight transportation slowly rebounds. After months of a freight recession, tightening capacity is beginning to shift the balance of power back toward carriers. This means fewer available trucks on the road, leading to delays and higher spot rates for shippers. Many shippers are renegotiating contracts to secure capacity in anticipation of continued demand growth heading into 2025.

The industry is also contending with rising operating costs, including fuel prices and driver shortages, which further strain the market. Smaller carriers are exiting the industry due to these pressures, reducing overall truck availability. To adapt, businesses are exploring alternative solutions like consolidating shipments, optimizing logistics networks, and relying on dedicated fleets to manage costs and secure reliable service.

Rail Intermodal Adapts to Tariff Pressures

Navigating Trade Policy Shifts

The rail intermodal sector is under pressure as trade policies and proposed tariffs create uncertainty for cross-border operations. Companies like Canadian Pacific Kansas City (CPKC), which relies heavily on integrated rail networks across the U.S., Mexico, and Canada, are preparing for potential disruptions if new tariffs are introduced. These challenges could lead to longer transit times, rerouted shipments, and increased costs for shippers who depend on rail for cost-effective solutions.

In response, rail operators and their customers are emphasizing the need for resilient strategies. Many shippers are looking at diversifying supply chains to reduce reliance on tariff-impacted regions. Others are pushing for better collaboration with rail companies to improve schedule reliability and mitigate risks. The sector remains focused on adapting to evolving trade policies while maintaining the critical flow of goods across North America.

New Shipping Alliances Chart the Future

Premier Alliance Sets Sail

The Premier Alliance, made up of HMM, Ocean Network Express (ONE), and Yang Ming, is preparing to launch its much-anticipated network in February 2025. Covering key trade lanes such as Asia-Europe, transpacific, and Asia-Middle East, the alliance has announced 24 services. The first departure is set for February 2, from Xingang to Abu Qir on the MD3 service. By March 1, the first full rotation will complete in Vancouver via the PN3 service.

However, not all services will start right away. The PS5 and PN4 services are postponed until May, attributed to seasonal adjustments. To bridge the gap, enhanced port coverage will be added to other routes. For example, Ningbo and Shanghai will join the PN3 service, while Qingdao will be included in PS6. These changes aim to ensure continued reliability as the Premier Alliance takes over from its predecessor, THE Alliance, which disbanded after Hapag-Lloyd exited to form a new partnership with Maersk.

Gemini Cooperation and Independent Additions

Hapag-Lloyd and Maersk have teamed up under the Gemini Cooperation, forming a strategic alliance set to compete with the Premier Alliance and others. Their focus will include enhancing Asia-Europe and transpacific services. At the same time, independent carriers like Wan Hai Lines are also expanding their offerings. Wan Hai’s updated PS6 transpacific service, a collaboration with ONE, will connect key Asian ports like Shanghai and Ningbo to the U.S. West Coast, including Long Beach and Oakland.

MSC, the largest shipping line globally, remains a standalone carrier but has strategically partnered with both the Premier Alliance and ZIM for select routes. For example, MSC will collaborate on Asia-Europe trades with the Premier Alliance and continue working with ZIM on transpacific services. These partnerships demonstrate the growing complexity and flexibility in how carriers collaborate.

What This Means for Shippers

For businesses, the reshaped alliances mean more route options, better port coverage, and enhanced service reliability. With frequent disruptions such as geopolitical tensions and environmental challenges, these alliances provide a stronger framework for global shipping. Shippers are encouraged to analyze the new networks closely to leverage these changes effectively. From improved Asia-Europe connectivity to a stronger transpacific focus, the 2025 alliance shakeup offers a promising path forward for the shipping industry.

Navigating Tariffs: Strategies for Resilience

Mitigating Trade Policy Costs

Trade tensions between the U.S., EU, and China are expected to remain high in 2025, keeping tariffs a hot topic for global supply chains. Businesses face rising costs from protectionist policies and are exploring ways to reduce the financial impact.

To counter immediate tariff costs, companies are adjusting pricing and sourcing strategies. Some absorb costs through reduced margins or pass them to consumers via higher prices. Shifting sourcing to regions with fewer tariffs or altering import strategies, such as assembling components locally instead of importing finished goods, are gaining traction as long-term solutions.

Businesses are also considering inventory management and advance ordering to avoid immediate tariff increases. While pulling forward shipments can provide temporary relief, it carries risks if tariffs are enacted retroactively. As trade protectionism persists, companies need to remain flexible, balancing short-term financial adjustments with long-term structural changes to navigate these challenges effectively.

Simplifying Mexico Cross-Border Shipping

Three Key Tips for Success

hipping freight across the U.S.-Mexico border can be tricky, with challenges like complex documentation and customs clearance. To avoid delays and costly mistakes, it’s crucial to choose a transportation partner that knows the ins and outs of cross-border logistics. Look for a partner with CTPAT certification, which streamlines customs clearance, and one equipped to handle specialized freight like hazardous materials or oversized loads. A reliable partner with strong relationships on both sides of the border can help make the process smooth and efficient.

Equally important is preparing all necessary documents ahead of time. A customs broker can assist with creating accurate paperwork like commercial invoices, bills of lading, and USMCA certifications for tariff exceptions. At customs, freight goes through checks to ensure compliance, and random inspections may add delays. Knowing what to expect at each step, and working with experienced providers, can make all the difference in navigating cross-border shipments with ease.

🎁 Ready to streamline your logistics this holiday season?

We’re here to help with custom solutions, global reach, and CTPAT-certified expertise to keep your freight moving smoothly. Call us today at 833-STARNAV (833-782-7628) Ext. 1 or click here to request a free custom route analysis.

Let’s make this holiday season your smoothest yet! 🎄