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Seven supply chain shocks in seven weeks

Feb 19, 2025 | , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Just seven weeks into 2025, global supply chains have already faced a whirlwind of challenges.

From industrial action to trade barriers and shifting alliances, businesses must stay agile to navigate ongoing disruptions. Here are seven of the most impactful developments so far this year.

1. US east coast port strike averted (8th January)
A major disruption was narrowly avoided as the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) reached a tentative six-year agreement. The deal, approved on 7 February, prevented a strike that could have crippled US east coast ports for months. A final vote on 25 February will confirm its ratification.

2. Uncertainty over Suez Canal return (19th January)
Despite a fragile ceasefire in Gaza, container ships will not be returning to the Red Sea anytime soon. Carriers remain cautious, fearing renewed instability and prioritising the established Cape of Good Hope diversions. Even if ships do resume transit, severe disruption is expected, with schedules taking up to two months to stabilise.

3. Trump’s trade policies spark concerns (20th January)
Following his inauguration, President Trump swiftly reignited trade tensions, threatening tariffs on Colombia, China, Canada, and Mexico. Proposals include a 25% levy on steel and aluminium from Canada and Mexico, with reciprocal tariffs also being considered for UK imports. The potential trade war could have widespread consequences for global supply chains.

4. US air cargo demand under threat (1st February)
Trump’s decision to impose a 10% tariff on all Chinese imports and temporarily suspend the de minimis exemption for low-value Chinese shipments has sent shockwaves through the air freight sector. While the exemption was reinstated, changes to eCommerce regulations could significantly disrupt air cargo flows into the US, which is expected to receive 1.4 billion eCommerce packages this year.

5. New Asia shipping alliances reshape trade (2nd February)
The long-anticipated shift from three major container alliances (Ocean, THEA, 2M) to four key players (Ocean, Premier, Gemini, MSC) is now in effect. Asia-North Europe scheduled liner capacity will shrink by 11%, yet the number of weekly sailings will increase from 26 to 28. These changes will reshape global shipping networks for years to come.

6. European road freight rates stabilising (4th February)
After three years of decline, European road freight spot rates may have hit their lowest point. According to the European Road Freight Rate Benchmark, spot rates fell just 1% year-on-year in Q4 2024. While demand remains weak, cost pressures have kept rates 15% above pre-pandemic levels, with short-term volatility expected.

7. Carriers cut sailings to stabilise rates (14th February)
Shipping lines are aggressively blanking sailings to ease the transition to new alliance schedules and sustain freight rates. Between 17 February and 23 March, 51 sailings have been cancelled across key east-west trade routes, with February’s cancellations rising to 133 from 104 in January. Further capacity withdrawals and a general rate increase (GRI) could follow if demand fails to recover.

With trade disputes, shipping realignments, and geopolitical instability shaping global supply chains, the first quarter of 2025 has already presented significant challenges.

Staying ahead requires proactive strategy adjustments to mitigate risks and build resilience. That’s why we share these insights and why your Metro account management team is always by your side, ready to provide expert advice, share knowledge, and develop bespoke solutions tailored to your supply chain needs.

For high-level support, EMAIL Andrew Smith, Managing Director.

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Gemini Cooperation’s bid to transform reliability

Feb 5, 2025 | , , , , , , , , , , , ,

As the Gemini Cooperation officially launches, its promise of 90%-plus schedule reliability through a hub-and-spoke network is under intense scrutiny.

Maersk and Hapag-Lloyd, the two partners in the venture, aim to address persistent reliability issues in container shipping, where schedule adherence has remained stubbornly low, fluctuating between 50% and 55% throughout 2024.

Gemini’s hub-and-spoke model, which involves central hubs facilitating feeder services to final destinations, is designed to optimise transit efficiency. By consolidating mainline services at designated hubs, the carriers seek to mitigate congestion-related delays that can plague conventional port-to-port operations. 

With 340 vessels and a combined capacity of 3.7 million TEUs, the Gemini network will eventually offer 57 interconnected services – 29 mainline routes and 28 regional shuttles – once fully phased in by mid-year.

Overcoming historical challenges

Achieving the ambitious 90% schedule reliability target remains a formidable challenge, given the industry’s historical struggles with port congestion and operational disruptions. 

While Maersk and Hapag-Lloyd have consistently outperformed the industry average, their own reliability in 2024 remained below 60%. By controlling key transshipment hubs Gemini aims to establish a more predictable flow of goods. 

External risks, however, remain beyond the carriers’ control. Congestion at key ports in China, including Shanghai and Ningbo, has intensified due to demand outpacing capacity growth. The ability of the Gemini model to navigate such disruptions will be crucial in determining its success.

A question of market adoption

Beyond operational feasibility, the long-term viability of Gemini hinges on whether shippers are willing to prioritise schedule reliability over cost savings. The model’s success will depend on whether customers are prepared to pay a premium for consistency, particularly in an uncertain 2025 market. While some shippers may value reduced inventory costs enabled by greater reliability, past efforts to introduce premium services struggled due to market fragmentation and price sensitivity.

With the majority of shippers valuing end-to-end reliability rather than just punctuality between hubs, the challenge for Gemini will be to demonstrate that its model can deliver comprehensive benefits across the entire supply chain.

An industry-first experiment

With competing alliances, Ocean Alliance, Premier Alliance and MSC continuing to favour traditional port-to-port networks, Gemini’s decision to embrace the hub-and-spoke model sets it apart. For ‘Ocean’ and ‘Premier’ it is more or less ‘business as usual’, with their service structure based upon the current setups. 

In particular ‘Ocean’s’ network remains largely unchanged, except for the re-launch of a seventh Far East to Europe service. Further to this, the alliance will add the South Chinese port of Yang- pu, on Hainan Island, to two of its Asia to North America loops. 

‘Premier’ mainly maintains the former THEA services and it will compensate the departure of Hapag-Lloyd by slot agreements with MSC on Far East to Europe services. Operationally, the partners will keep full control of ‘their’ loops, while retaining an existing Vessel Sharing Agreement with Wan Hai Lines in the Transpacific trade. ‘Premier’s’ largest member, ONE, will also continue a Transatlantic Vessel Sharing Agreement with the members of ‘Ocean’. 

With the network still in its early stages, industry observers remain divided on whether Gemini can deliver on its promises. Yet, if the venture achieves its ambitious targets, it could compel competitors to rethink their approach. The coming months will provide the first indications of whether this bold experiment will reshape global container shipping or simply become another ambitious but short-lived attempt at reform.

Metro negotiates rates and volume agreements with a broad portfolio of carriers, including MSC and the three major alliances, ensuring shippers have access to the widest range of service options, port pairings, and competitive rates. 

Our tailored ocean freight solutions reflect each customer’s unique requirements and expectations, delivering optimised logistics strategies. For expert guidance EMAIL Andy Smith, Managing Director, to review your situation and find the best solution for your supply chain.

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Container shipping braces for volatility as Red Sea routes beckon

Jan 23, 2025 | , , , , , , , , , , , , , , , , ,

For over a year attacks on merchant vessels by Houthi militants has forced container carriers to reroute around the Cape of Good Hope. However, a newly established ceasefire and assurances from Houthi forces to limit attacks on non-Israeli vessels signal the possibility of a return to the Suez Canal route.

The ceasefire in Gaza and Houthi pledges to cease attacks on most vessels offer cautious optimism for carriers, who have stated that they will only return to Red Sea transits “when it is safe to do so”.

The assurance that ships will not be targeted, alongside a reduction in hostility towards vessels calling at Israeli ports, should pave the way for safer Red Sea transits.

However, the situation remains fragile. The Houthis have reserved the right to resume attacks should aggression occur in Yemen, and their targeting of Israeli-flagged or wholly Israeli-owned vessels persists. Furthermore, full implementation of the ceasefire agreement’s later stages is crucial for long-term stability.

Capacity oversupply threatens
While the reopening of the Red Sea route presents an opportunity to streamline shipping operations, it also introduces significant challenges.

Currently, close to 100% of container vessels avoid the Suez Canal, diverting around Africa and effectively removing over 12% of fleet capacity. This artificial tightening of capacity has driven freight rates to significantly higher levels in 2024, with spot rates more than tripling on some trades.

The return to shorter voyages through the Suez Canal will flood the market with capacity, dramatically altering the supply-demand balance. Analysts predict carriers will struggle to absorb the 1.8m TEU excess, with scrapping and slow steaming unlikely to offset the impact.

Operational challenges
Resuming Red Sea transits will also bring logistical hurdles. Carriers face the complex task of realigning schedules disrupted by the year-long diversions. Ships arriving earlier or later than expected at ports could lead to congestion and delays, adding to the strain on global supply chains.

Port congestion, particularly in Europe, is a key concern. A surge in vessel arrivals could overwhelm infrastructure, causing temporary backlogs that disrupt the smooth flow of goods. The shipping industry must also contend with record deliveries of new vessels, further compounding capacity issues.

While the reopening of the Red Sea route offers opportunities to reduce transit times and operational costs, the transition is unlikely to be smooth. The combination of excess capacity, volatile freight rates, and logistical challenges will create uncertainty in the short term.

With geopolitical risks casting uncertainty over the industry, building resilient supply chains, securing comprehensive cargo insurance, and managing budgets effectively will be essential for navigating the 2025 sea freight landscape.

In this volatile market, our marine insurance cover and fixed-rate agreements on key shipping routes help minimise risk and provide budgetary stability.

To discover how Metro’s insurance solutions and fixed-rate options can support your business in 2025, please EMAIL Managing Director Andy Smith.

CMA CGM Montmarte

Record volumes raise concerns for peak season

Jul 24, 2024 | , , , , , , , , , , , , ,

Global demand for ocean freight container shipping has surged to unprecedented levels, surpassing even the peak during the Covid pandemic and comes when available capacity is already strained due to diversions around Africa, leading to concerns that any peak season demand could be calamitous.

Chinese exports reached a record high of 6.2 million TEU in May and while there is hope that early shipments will reduce volumes during the traditional peak season in the third quarter, other factors could keep demand high. 

Nervous shippers are re-stocking and seeking to avoid potential future tariffs on imports from China, which could sustain high demand in the coming months.

Approximately 19% of US shippers and 26% of European customers are advancing their shipping schedules due to fears of supply chain disruptions.

Planned US tariff increases on goods, including electric vehicle-related materials, battery parts, and solar cells, could further elevate freight costs as exporters rush to front-load shipments. The Hong Kong Small and Medium Enterprises Association noted that many manufacturers are struggling with tighter deadlines and increased overtime pay in mainland China, jeopardising profitability.

With importing customers asking for orders to be shipped earlier than usual, Chinese manufacturers are increasingly struggling to meet the shortened schedules necessary for timely festive season deliveries. The average cost of moving a 40ft container between Asia and northern Europe has more than doubled in two months, with a roughly fivefold increase from the same period last year.

Recent spot rate indexes for sea freight have shown the smallest gains in months, with some main east-west routes seeing a pause in growth. The slowdown suggests the market might be reaching an equilibrium of supply and demand. However, it remains unclear whether this is a temporary early peak season or if demand from front-loading shippers will persist, particularly with potential US tariff increases looming.

While Asia-to-Market routes have stabilised, others continue to show week-on-week rises, with the WCI’s Shanghai-Rotterdam leg and XSI’s Asia-Europe component both increasing. Monitoring space availability closely, there are reports that vessel utilisation might be slipping, potentially making bookings easier to acquire. However, rates are expected to remain high throughout the peak season, especially for shipments ex-China.

Equipment shortages
Please be aware that we are seeing more reports from carriers that intra-Asia routes are experiencing equipment shortages, particularly out of China. This is an industry-wide issue that initially affected long-haul shipping but now has extended to intra-Asia routes. The demand for export containers in China means that carriers have to decide whether to prioritise carrying empty containers back to China or carrying laden containers to other destinations.

We are monitoring the station closely, as it could possibly push rates up, potentially cascading into the backhaul trades to Asia and regional trades.

The unprecedented demand for ocean freight and ongoing challenges in capacity and costs suggest a complex and potentially turbulent peak season ahead.

We recommend talking to us now, if you have any urgent or high-priority orders forthcoming and sharing your shipping forecasts, so that we can secure your space, on the services that meet your deadlines, at the best possible rates.

To learn how we can enhance your ocean freight solutions, please EMAIL our Chief Commercial Officer, Andy Smith. 

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