HMM reports 500% rise in operating profit, and eyes fleet and route expansion
South Korean container line HMM is yet another major carrier to enjoy a bumper 2024, ...
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HD: DIY RE-PRICINGZIM: A RISING TIDE LIFTS ALL BOATSTSLA: CHINA THREATDAC: KEY REMARKSDAC: SURGING GM: SUPPLY CHAIN WOESMAERSK: ROTTERDAM TEMPORARY SUSPENSION OF OPERATIONSATSG: OWNERSHIP UPDATERXO: COYOTE FILLIP GONEGM: SUPPLY CHAIN HITBA: CUT THE FAT ON THE BONER: STEADY YIELDMAERSK: SELL-SIDE UPDATESDAC: TRADING UPDATE OUT SOONTSLA: FEEL THE PAIN IN CHINAWMT: GUESS WHATXPO: SURGINGAMZN: LOOKING FORWARD
Air cargo volumes have rebounded partially since the Christmas slump – but indications suggest 2025 could be a soft year for freight.
That is particularly true in ocean, which could have a knock-on effect on air cargo, especially if ecommerce tonnages are down.
In ocean, high retail inventories, the likely re-use of the Suez Canal, and significant amounts of capacity suggest this year “will be a buyers’ market”, shipper Alan Mctaggart, VP of global logistics at Techtronic Industries, told Freight Buyers Club podcast.
“I think we’re looking at stability, and that will certainly take the heat out of freight rates.”
And Alan Murphy, CEO of Sea-Intelligence, told The Loadstar: “The buildup of retail inventories, in considerable excess over the long-term trend, shows that US importers are likely hedging for the coming US tariffs on Chinese imports, in addition to building up buffer stock, which we have seen since the end of the pandemic.
“The inventory-to-sales ratio has also been growing steadily over 2024, so the inventory increase is not driven by an equal increase in sales. This would suggest less demand for US container imports, which should put downwards pressure on freight rates, as importers draw down their pre-tariff inventories.
“If we also see a gradual return to a Suez routing following the ceasefire, then rates are going to tank.”
So far in airfreight, tonnages have rebounded since the end-of-year slump, up 8% in week 3, after growing 29% the previous week, according to WorldACD. The last week of December saw tonnage drop 35%.
Global air freight rates, contract and spot, stayed broadly flat, but are 7% higher than last year. Spot rates dropped 3% week on week, but are 16% higher than last year.
The analyst noted: “Some air cargo industry executives have expressed concern this month about how steeply tonnages (mostly ecommerce) from Asia Pacific have dropped off since their peak in mid-December, especially to Europe. Analysis by WorldACD indicates that the overall decline this winter is not significantly greater than last winter.”
However, it added Asia Pacific-Europe last year had rebounded by week 3 to the levels of weeks 48, 49 and 50, while this year they are still 20% below. But it acknowledged that the timing of Chinese New Year may be a factor.
Asia Pacific to the US saw tonnage rebound in week 3 by a further 7% following an 11% recovery the previous week, taking them back to around 16% below their early December peak levels, recorded in week 48. Spot rates on the lane dropped to $5.21 in week 3 – still 29% higher than a year ago, but down from a peak of $6.89 in week 50.
Airfreight’s fortunes will again rely quite heavily on ecommerce. Expeditors said today ecommerce was “the headline influencer”, and that there would be an upswing after Chinese New Year. It also said shippers were eyeing different air hubs to make best use of available capacity.
“Ecommerce volumes [are] adopting [an] ocean-to-air model, exporting to other Asia ports (Singapore, Korea, Vietnam) to unlock additional airfreight capacity.”
And the UK’s Metro Shipping noted that high inventories had combined with lower ecommerce demand: “Despite surging demand for general cargo like electronics, automobile parts, and garments out of India, Vietnam, and Thailand, the airfreight sector’s strong reliance on ecommerce has been a double-edged sword. While the pandemic initially spurred a boom in ecommerce shipments, recent months have seen a sharp decline, with ecommerce volumes dropping significantly since the start of the year, particularly from China.
“Retailers’ full inventories and softer consumer demand have exacerbated this trend, leaving carriers grappling with reduced activity levels. While other verticals, such as pharmaceuticals and automotive, remain stable, the gap left by diminishing ecommerce volumes presents an ongoing challenge.”
Dimerco’s Kathy Liu, global head of sales and marketing, added that the early lunar new year holiday, plus change of administration in the US triggering early shipments, meant “we might not see the usual peak season before Chinese New Year, especially for TPEB routes”.
But she said that intra-Asia was busy, “particularly with raw material transfers, and key destinations like Taiwan, Singapore, Vietnam, Indonesia, India, and Thailand are seeing strong demand. Ecommerce activity has slowed after the 2024 promotions”.
Several airlines have cut freighter flights to China for the holiday, with Dimerco expecting a “step-by-step” recovery after CNY.
It added that “European carriers on the China-Europe route are facing pressure from new Chinese entrants lowering Far East rates to capture volumes”.
Metro concluded: “Looking ahead, the Asia–Europe airfreight tradelane must strike a balance between resilience and adaptation. While commodities such as automotive parts, pharmaceuticals, garments and hi-tech goods provide a stable foundation, diversification across more verticals will reduce vulnerabilities.”
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