Freight and Logistics News and Market Update

North America

Air

• The new US President held off placing tariffs on China upon taking office on Monday. This unforeseen move opened the door for a possible new start to trade negotiations between the US and China. Both countries find themselves in need of a new path to push forward their agendas and guard their interests. However, previously unresolved issues, for example, the trade deal of 2020 may unsettle the currently pleasant atmosphere between the two nations.
• The new US administration is looking to implement proposed tariffs on Mexico and Canada beginning February 1. The proposed tariffs of 25% for the two countries could significantly impact US imports related to the energy and automotive industries. Both nations have stated they would enact trade restrictions of their own on the US in retaliation.
• January capacity and rates have remained above 2024 levels. Cargo capacity on routes between Asia Pacific (APAC) and Europe has seen double-digit growth compared to the previous year, with APAC to North America capacity up 11% and the return leg rising by 8%. Widebody bellyhold capacity has returned to pre-COVID levels, largely driven by Chinese carriers. While spot market rates remain over 20% higher than in January 2024, there are indications of rate declines in some areas.
• 7 Air Cargo, a US-based start-up, has received tentative approval from the Department of Transportation to commence operations. The carrier currently leases two 737-800 freighters, with plans to add two more within the first year. Its proposed network includes destinations across the contiguous United States, South America, the Caribbean, Mexico, Canada and Alaska.

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Ocean

• The global reefer charter market faces challenges in forecasting medium-term trends due to factors beyond traditional supply and demand, including geopolitical incidents and competition among container carriers. Specialized reefers have thrived during supply disruptions, as seen during the pandemic, Houthi attacks and Panama Canal restrictions. Strong demand for perishables like Chilean cherries and Peruvian grapes in early 2025 suggests specialized reefer services will remain important, positively impacting global reefer contract rates.
• A White House report highlights concerns over China’s trade practices, emphasizing its significant influence in maritime sectors, with control over 95% of shipping containers and more than 50% of shipbuilding production. The report points to non-market strategies that could undermine competition, adherence to WTO rules and fair market practices. It suggests the US refine its strategies by boosting domestic investments and strengthening alliances to promote balanced global trade dynamics.st's share.

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Latin America

Air

• Mexico has increased tariffs on foreign apparel and textile imports to bolster its manufacturing sector and prevent the misuse of its free-trade agreement with the US. The new taxes aim to ensure that products labeled 'Made in Mexico' are genuinely manufactured there, closing loopholes that allowed foreign goods to enter the US duty-free via Mexico.

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Ocean

• In his inaugural speech, US President Trump stated that Panama had broken its promise to remain neutral and suggested that China was operating the Panama Canal. He reiterated his intention to protect American interests by asserting control over the canal. In response, Panama's President José Raúl Mulino affirmed that the canal remains under Panamanian control and refuted any claims of foreign influence.

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Asia-Pacific

Air

• The South Korean government has allocated $250 billion won to support exporters as new US tariffs are expected to impact shipments. The export industry in South Korea has been experiencing declining growth, with projections indicating a decrease from 2.1% in 2024 to 1.8% in 2025. The funding aims to provide liquidity and support supply chains in key sectors such as semiconductors and automotive products.
• Capacity constraints plagued air cargo out of APAC hubs for much of 2024 due to significant demand increases and higher than expected eCommerce volume to US and European destinations. Moving into 2025, the expectation is for capacity to remain limited as eCommerce giants continue to contract directly with carriers for a sizable portion of the available space on those heavily trafficked lanes. The introduction of new tariffs and changes to De Minimis thresholds are unlikely to loosen the constraint in the short term but the full effects remain to be seen.

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Ocean

• Hapag-Lloyd and CMA CGM are expanding their intra-Asia networks with new services and port calls ahead of the Gemini Cooperation launch on February 1. This initiative aims to improve connectivity for trans-Pacific and regional trade. Intra-Asia trade rates are declining due to weak demand and the absence of a pre-Lunar New Year peak, with potential further reductions driven by peak season changes and alliance adjustments. While rates have dropped on routes like Shanghai to Bangkok, capacity constraints and delays have kept rates stable or slightly rising in some areas.
• Eastbound trans-Pacific carriers are extending spot rates through mid-February due to weak demand ahead of Lunar New Year factory closures. West Coast rates have dropped 10% to $4,700 per FEU, while East Coast rates have fallen 7% to $6,000. Carriers are offering promotional rates to secure bookings, but declining demand and uncertainty over potential tariff changes under the new US administration may prompt shippers to delay shipments.

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Europe

Air

• In 2024, European air hubs reported significant year-on-year cargo volume growth, with Frankfurt up 6.2%, Brussels up 5% and Vienna experiencing a 22% increase. Other major airports, including Heathrow, Liege and Schiphol, saw growth ranging from 8% to 15.6%. This trend reflects rising demand for air cargo capacity and underscores the importance of European air hubs moving forward.
• The Challenge Group has completed the registration of its first 777-300ER freighter conversion under a deal with AerCap. In 2024, the group operated over 4,000 flights and expanded its network by adding five new destinations across Europe, Africa and the Middle East.

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Ocean

• The Houthi rebels’ recent pledge to cease attacks on international shipping in the Red Sea is tied to the continuation of the Israel-Hamas ceasefire, leaving UK vessels at potential risk if hostilities resume. The fragile nature of the ceasefire necessitates vigilance from European shipping companies, which must regularly assess security conditions. This uncertainty has led to increased shipping costs and potential disruptions in Europe-Asia trade routes, as vessels may need to reroute to avoid high-risk areas.

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India, the Middle East and Africa

Air

• Following the Israel-Hamas ceasefire agreement, airlines are cautiously planning to resume flights to the region. The Lufthansa Group, including Brussels Airlines, Eurowings, Austrian Airlines and Swiss aims to restart service to Tel Aviv in February while AFKLM plans to resume flights later in January.
• Emirates SkyCargo announced the addition of two Boeing 747 freighters as the outlook for air cargo demand remains positive. The addition will increase the carrier’s freighter capacity by 15% over 2024 levels. The new aircraft brings the all-cargo fleet to 16 aircraft, with 13 additional 777Fs to be added over the next two years.

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Ocean

• Following the ceasefire agreement between Israel and Hamas, Houthi militants in Yemen announced they would limit attacks on ships in the Suez Canal to Israel-affiliated vessels. Carriers remain cautious, continuously analyzing the security situation to ensure the safety of vessels and crew before fully resuming Red Sea shipping. A return to the Suez Canal is expected to significantly lower ocean rates as capacity is reshuffled and more becomes available.

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Customs Brokerage

• Customs and Border Protection has reclassified three commodities with changes effective January 2025. Men’s vests or sleeveless jackets are now classified as sleeveless jackets under HTSUS 6201.40.7000 (7.1 percent duty if water-resistant) or HTSUS 6201.40.7511 (27.7 percent duty if not water-resistant) rather than vests under HTSUS 6211.33.0054 (16.4 percent duty). Steel assembly hardwood sets are reclassified as continuously threaded rod under HTSUS 7318.15.5056 (duty-free) instead of other nuts under HTSUS 7318.16.0085 (duty-free). Wood chipping and shredding machines are now classified as forestry machinery under HTSUS 8436.80.0020 (duty-free) instead of other machinery under HTSUS 8436.80.0090 (duty-free).
• The Office of the US Trade Representative has released its first strategy for using trade tools to combat forced labor. The document outlines current US government efforts and potential future actions, focusing on strengthening enforcement and fostering global collaboration to eradicate forced labor in trade.
• US Customs and Border Protection (CBP) has proposed changes to de minimis entry rules, which currently permit duty-free imports valued at $800 USD or less. The amendments would exclude goods subject to Section 301, 232 or 201 tariffs from eligibility and require a 10-digit HTSUS classification for specific shipments. These changes aim to address enforcement challenges caused by the surge in de minimis shipments, now surpassing one billion annually, which complicate trade action enforcement. Comments on the proposal are due by March 24, 2025, with CBP expecting the changes to significantly reduce de minimis shipment volumes.

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