Posted on October 14, 2024
Ocean Update
US East and Gulf Coast operational recovery post ILA work stoppage
On Thursday, October 3rd, the International Longshoremen’s Association (ILA) and the United States Maritime Alliance, Ltd. (USMX) reached a tentative agreement on wages and to extend the Master Contract until January 15, 2025, to return to the bargaining table to negotiate all other outstanding issues. Work resumed at most ports along the US East and US Gulf coasts on Friday, October 4th. While some residual delays may occur as port operations gradually return to full capacity, our teams continue monitoring the situation closely.
For all our Maersk updates on this situation, please check our updates published here.
To stay up to date on the latest developments, ensure you’re subscribed to receive our advisories here.
Macro-economic Update
The U.S. economy grew last quarter at a healthy 3 percent annual pace, fueled by strong consumer spending and business investment, the US Commerce Department reported in their latest assessment.
S&P Global Ratings expects the U.S. economy to expand 2.7% in 2024 and 1.8% in 2025 (on an annual average basis). The growth forecasts are 0.2 and 0.1 percentage point higher, respectively, compared with S&P’s June forecasts, partly reflecting the impulse from financial conditions that turned more positive and partly on stronger core goods consumption than previously expected.
Recent economic indicators point to solid domestic demand, with real GDP growing at a 2.2% annual rate in the first half of the year. As the economic outlook by S&P Global presents, consumer demand remains resilient, supported by strong core retail sales in July and August, along with a recovery in motor vehicle sales. However, not all consumer data presents a positive outlook. Real restaurant sales, a measure of discretionary spending, have weakened in the third quarter, showing a downward trend. Despite this, S&P’s current estimate forecasts a robust 3.5% annualized growth in consumer spending for the third quarter, the fastest pace since the first quarter of 2023.
Ocean Market outlook
Container Demand: Global container volumes grew by 6.6% year-over-year in Q2 2024, supported by robust imports to North America, Latin America, and continued strong exports from the Far East Asia region.
According to the Global Liner Performance Report – August 2024 (Sea-Intelligence Maritime Analysis), in July 2024, Maersk was the most reliable carrier with a schedule reliability of 54.6%. This marked a slight decrease compared to earlier in the year, but still placed Maersk as a leader in reliability among global carriers. The overall global schedule reliability dropped to 52.1%, with Maersk outperforming the average. Additionally, Maersk showed improvements in specific trade lanes, helping maintain its leadership position in a challenging market, where global schedule reliability has fluctuated between 50% and 55% throughout the year.
Setting a new standard for reliability and service quality
In February 2025, together with Hapag-Lloyd, we are launching an operational collaboration called the Gemini Cooperation to deliver our Network of the Future which covers the ocean freight network on East-West trades. The ambition of the Network of the Future is to reduce network complexity with mostly single operator loops and fewer port calls per service, incorporate terminals with the highest level of productivity and operational efficiency.
After thorough consideration and given the continued safety concerns in the Red Sea, together with Hapag-Lloyd we confirm that we expect to phase in our Cape of Good Hope network for the commencement of the Gemini Cooperation on February 1, 2025. As the situation remains highly dynamic, Hapag-Lloyd and Maersk will return to the Red Sea when it is safe to do so.
Once fully phased in, Gemini Cooperation aims to deliver industry-leading schedule reliability of above 90 percent, ensuring efficient and flexible services across the East-West trades. The Cape of Good Hope network will include 29 mainliner services supported by 28 intraregional shuttle services and operated by a fleet of around 340 vessels with a total capacity of 3.7m TEU.
For more details on the Network of the Future and a full overview of the network setups, click here.
Air Freight Update
The global air cargo market’s hot summer of double-digit demand growth continued in August, with average spot rates showing their largest year-on-year growth of +24%, according to analysis by Xeneta.
According to Xeneta, global average air cargo spot rates of USD 2.68 per kg in August were boosted by the continuing supply-demand imbalance. August’s global cargo supply grew at its slowest ratio in 2024 to date, at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%. The increase was further supported by the ocean-to-air shift due to Red Sea disruptions and e-commerce demand.
E-commerce continued to show strong growth as the air cargo market cruised towards its hotly anticipated peak season. According to Trade and Transport Group, e-commerce and low-value goods exports from China in the first seven months of 2024 increased +30% year-on-year.
Customs Update
Getting importers ready to comply with the CPSC’s upcoming eFiling requirements
Before we dive deeper into these new requirements, let’s look back at how we got here and what the CPSC is exactly. The CPSC, or the Consumer Product Safety Commission, was enacted in 1972 as an independent federal regulatory agency with a mission to protect the public against unreasonable risks of injury or death from consumer products through education, safety standards, regulation, and enforcement.
Since 2008, importers have been required to maintain Certificates of Compliance in a manual environment, but in June 2022, CPSC announced the joint Beta Pilot test, seeking up to 50 participants to test this new requirement. By 2023, the Commission and Customs and Border Protection had 37 importer-participants signed up for the pilot test program, including Maersk Customs Services USA. Later that year, CPSC published a proposed rule that would require importers with regulated consumer products to eFile their Certificates of Compliance at the time of entry.
This past summer the CPSC expanded its beta program testing and issued an “eFiling Quick Start Guide,” which provided additional information about the program and predicted that “full implementation of eFiling will occur in or around 2025.” It is crucial for importers to review their product catalog to ensure whether or not their commodities will be affected and require such certifications. Per U.S. Customs, products must be certified if they are finished products, subject to a consumer product safety rule, ban, similar rule, standard, or regulation, imported for consumption or warehousing, or distributed in commerce.
Note that there is no de-minimis exemption for eFiling. Therefore, any product requiring certification must have an eFiled certificate, regardless of the value of the goods. Examples of such products requiring a Certificate of Compliance include but are not limited to are products for children, such as toys and clothing, carpets and rugs, drywall, mattress pads, mattresses, clothing storage units, certain upholstered furniture, magnets, bicycles and more. Also – even if a consumer product does not require a certificate of compliance or that are exempt from all otherwise applicable testing requirements, it must still be specifically transmitted through the eFiling process through a disclaimer code.
The Importer of record is the ultimate party responsible for eFiling a product’s Certificate of Compliance. The proposed eFiling states that 7 data elements will be required to be submitted at the time of transmitting the Customs entry. Those 7 data elements are Product ID Identification of the finished product, Citation Codes, Manufactured Date when the finished product was manufactured, Manufactured Location Place, Date when the finished product was most recently tested for compliance, Test Lab Party(ies) used for testing a certificate per 16 CFR Part 1110 and Point of Contact information for the party maintaining records of test results.
These data elements can be submitted to CPSC by the Importer of record, the laboratory performing the tests, by the manufacturer, or by the Customs Broker. Maersk Customs Services USA will be able to provide support for importers needing to upload these data elements.
If you are need of such support or want to learn more, reach out to Desiree Montalvo-Dobao – Head of CHB Commercial in North America for more information on how we can be of assistance.
Warehousing Update
The warehousing market in North America is expected to reach a projected revenue of US$ 507,564.3 million by 2030. A compound annual growth rate of 7% is expected of North America warehousing market from 2024 to 2030, as reported by Horizon Grand View Research.
Several factors are currently driving the North American warehousing and storage market. The demand for outsourcing warehousing services has grown from manufacturing companies catalyzed by their productional and operational expansions.
This has led to an increase in logistics needs for storing raw materials and finished goods for retailers and distributors. In addition to this, considering the advantages of outsourcing in terms of enhanced operational efficiency and cost savings, shippers are also increasingly outsourcing the logistics portion of their activities to warehouse service suppliers.
At Maersk we recently unveiled a cutting-edge 402,000-square-foot facility in El Paso, Texas, catering to the burgeoning demand for logistics services at the US-Mexico border. Situated just minutes away from the Ysleta-Zaragoza International Bridge, this strategic location facilitates rapid and adaptable cross-border trade operations, facilitating seamless interactions between countries. Boasting 73 dock doors, two ramps catering to oversized cargo, and 116 truck yard spaces, the multiclient facility is primed for efficient cargo processing, consolidation, and freight distribution across North America via Maersk’s robust ground freight network.
Also, Maersk Warehousing & Distribution Services USA LLC, a Maersk company has opened a new 1.2 million square foot omnichannel fulfillment facility in Groveport, Ohio, to help serve Levi Strauss & Co.’s wholesale, retail, and e-commerce channels. For Maersk, this represents a capstone to its comprehensive logistics support for LS&Co., which includes end-to-end solutions from origin consolidation to omni-channel fulfillment. For LS&Co., the facility is a key element in an ongoing distribution and logistics network transformation designed to significantly increase best-in-class omnichannel capabilities and further the company’s push to become a Direct-to-Consumer (DTC)-first business. Operations at the Groveport facility commenced in August. Read the full announcement here.
Maersk has more than 150 warehousing facilities across the United States, Canada and Mexico totaling more than 26 million square feet. In March, we also announced the opening of a new warehouse facility in Tijuana, Mexico.
Learn more about warehousing and distribution in North America here.
Topics, Trends and Insights
Alette Maersk makes history in Los Angeles
We’re thrilled to welcome Alette Mærsk – the 4th large dual-fuel vessel in our fleet, measuring 350 meters with 16,000 TEU container capacity! On August 27th, Alette Mærsk was christened by her godmother, Nike athlete, snowboarder, and two-time Olympic gold medalist Chloe Kim, in a memorable naming ceremony at the Port of Los Angeles.
In keeping with our tradition of naming Maersk vessels after members of the founding family, Alette Mærsk proudly carries the name of Alette Mærsk Mc-Kinney Sørensen, great-granddaughter of A.P. Moller, founder of the A.P. Moller Group.
This is the first time a vessel in our 120-year history has been named Alette Mærsk, making this moment even more special. Powered by green methanol, Alette Maersk sailed from Xiamen to Los Angeles, marking another milestone in our decarbonization journey with our partner, Nike and Venkatesh Alagirisamy, who has championed climate responsibility within the supply chain, embracing our ECO Delivery biofuel program and setting standards we hope others will follow.
Maersk CEO, Vincent Clerc shared “The challenge ahead is immense. The shipping industry is vast, complex, and difficult to decarbonize. Our new series of dual-fuel vessels is a start, but it’s not a sustainable solution.
We need immediate, coordinated action across all industries and we urgently need regulation that makes green fuels viable and affordable.”
Global shipping leaders are united in this call. The time has come for the International Maritime Organization to approve the Green Balance Mechanism to incentivize sustainable shipping without significantly raising global trade costs.
Check out the highlights from the ceremony here.
