Sea freight spot rates are declining in many trade-lanes, air freight rates remain robust due to capacity shifts and steady demand, with road freight rates in Europe and the US pressured by structural cost challenges, evolving regulations, and constrained capacity.
Adding to this complexity, labour disputes on the US East and Gulf coasts could further disrupt supply chains. The International Longshoremen’s Association (ILA) must reach an agreement with maritime employers by 15th January to avoid another port strike. Should negotiations fail, the incoming US administration may need to intervene, as seen during October’s three-day port shutdown.
OCEAN
Global sea freight spot rates continued to decline in November, with average rates now at their lowest level since April, despite remaining significantly higher than pre-pandemic averages. Spot rates fell by 2% month-on-month, marking a sustained shift in long-term rate trends. Year-on-year, rates remain 68% below pandemic peaks but are still over 130% higher than 2019 levels.
In Europe, import rates edged down by less than 1% in October, 7% lower than last year, while export rates continued their downward trend, falling for the eighth consecutive month. Growing trade imbalances, with 1.4 containers imported for every one exported, are adding pressure to European exports.
In the US, import rates dropped 5% in October but remain buoyed by strong trades from the Far East. Conversely, US export rates rose by 5%, reaching their highest level since June. In the Far East, export spot rates fell 7.5% month-on-month but remain 27% higher than a year ago, highlighting the region’s ongoing strength.
The recent softening of spot rates is expected to continue influencing long-term rates in the coming months, but challenges such as trade imbalances in Europe and political uncertainty in the US could create regional variations in rate trends.
AIR
The global air freight market showed mixed performance in November, with tonnages holding steady and rates rising on key routes. While the peak season has been softer than expected, eCommerce growth and shifting capacity have driven regional rate fluctuations.
Global air freight rates rose 2% in late November, with year-on-year, global rates up 10%, while average spot rates surged 22% compared to 2023 levels, driven significantly by North America and Europe. Rates from Asia Pacific to North America routes remained stable month-on-month but were up 10% compared to last year.
On the transatlantic, rates from Europe to North America rose sharply, with spot rates up 24% year on year and increasing further by 16% over the past two weeks. Attributed to reduced passenger belly capacity due to airlines’ winter schedules, together with a 10% drop in freighter availability.
Capacity shifts towards the Asia Pacific region, up 7% year-on-year, reflect growing eCommerce demand from China and Hong Kong to Europe and North America.
Despite a peak season characterised by softer-than-expected demand, key markets have demonstrated notable resilience. Westbound spot prices from Europe to South America rose dramatically, due to capacity shortages, while spot rates from China and Hong Kong to Europe recorded modest weekly increases, driven by steady eCommerce activity.
ROAD
In the UK and Europe, the road freight market remained stable in Q3 due to softer short-term demand, but structural cost pressures and evolving regulations are driving rates higher. New truck registrations fell by 7.5% year-to-date, limiting capacity growth and sustaining elevated freight costs. Many carriers are extending vehicle lifespans, with the average truck age at 14.2 years.
Key cost drivers include rising tyre prices, with new EU regulations banning non-compliant rubber imports by year-end, and volatile diesel prices, despite recent declines. Inflationary pressures on insurance, maintenance, and energy costs continue to keep rates above historical levels, with further increases expected in Q4.
In the US, less-than-truckload (LTL) carriers are preparing for higher pricing in 2025, with general rate increases (GRIs) of 5–8% announced for non-contract business. These GRIs are aspirational and subject to negotiation, but they set expectations and are driven by rising operating costs and the need to expand terminal networks.
Carriers increasingly prioritise profitability over market share, adopting disciplined pricing strategies and resisting discounting. Their pricing models allow carriers to optimise margins on a lane-by-lane basis, taking client behaviours into account. Inspired by Old Dominion’s profitability-focused approach, carriers are moving away from unsustainable low-rate models that have led to failures like Yellow and Central Freight Lines.
Whatever challenges your supply chain may face, our commercial vehicle fleet and the price and capacity agreements we have in place with our long-term partner air and ocean carriers mean that we continue to deliver resilient and reliable supply chain solutions.
Our purchase order management and supply chain tracking technology support the most demanding global trading regimes, providing transparency and control.
EMAIL Andy Costara to learn more and see how our technology can support your supply chain.
