TPM25 Theme

As the market witnessed in the spring of 2024, conditions in container shipping can and often will change on a dime. The market pivoted with little warning, from one of overcapacity where carriers forecast a down year and BCOs signed annual contracts at fully normalized rates, to spot rates that as of early July exceeded $8,000 per FEU from Asia to North Europe and $8,000 per FEU on the eastbound trans-Pacific to the West Coast, according to S&P Global Commodity Insights. Thus, it is folly in the summer of 2024 to anticipate with any conviction what the market will look like when TPM25 convenes on March 2-5, 2025.

And yet, it’s still possible to identify some big-picture themes that will still be playing out early next year, irrespective of the latest market gyrations, and that will guide initial development of the program in the coming months.

• Is service consistency worth even wishing for? A high priority of many shippers is reducing cost, as shown by a recent Alcott Global survey, partly driven by a need to reduce inventory costs that have been propped up by higher interest rates. Any dialing back of a “just-in-case” buffer, however, requires service consistency, and that is sorely lacking: As of early July, carrier on-time performance was a sobering 55%, according to Sea-Intelligence. Carriers talk about the need to improve reliability, and Maersk and Hapag-Lloyd have spelled out how they will fix it at least on some services within their newly formed Gemini alliance, but what are the prospects for real improvement? 
• Tariffs’ potential to wreak havoc on trade flows. Newly imposed tariffs and campaign rhetoric only reinforce further how globalization is a bygone era. Biden administration tariffs announced in May on Chinese solar cells, semiconductors, lithium-ion batteries, and electric vehicles could be expanded and/or intensified by a second Trump administration, whose tariffs on $350 billion in Chinese imports Biden left untouched. Candidate Trump has threatened 60% tariffs on all China imports. Depending on how this plays out, expect a major impact on the trans-Pacific and other trade lanes, and a topic to be covered at TPM25.
• Is overcapacity inevitable? More than 200 container ships totaling 1.5 million TEU in capacity are still scheduled to be delivered in 2024 as of early May, according to S&P Global. Given that, many industry analysts believe overcapacity will return with a vengeance as soon as the spring 2024 volume runs its course. But some dispute this, believing the Red Sea diversions could endure for a while, many strings still require additional ships, and vessel speeds around the Cape of Good Hope are still faster than carriers would like. In addition, new International Maritime Organization rules to curb greenhouse gases will begin to bite in 2025, leaving increasing numbers of older ships uneconomic. 
• Did a different type of ocean carrier emerge from the pandemic? The market determines shippers’ and carriers’ leverage, and right now carriers hold the advantage. But is there evidence of a new mindset embedded in carriers’ behavior in the current tight market, where NVOs are being squeezed on named accounts and additional surcharges are being applied liberally? Many believe so and it may not be cyclical. Tough lessons learned during the pandemic are being applied. Carriers are not passing up opportunities as they may have in the past, and forwarders especially in the mid-sized range are feeling the impact and need to adjust accordingly. 
• Supply chain disruption used to be the exception. Now it’s routine. What does it mean for shippers that supply chain shocks have occurred one after another since 2020, becoming the norm? How does a shipper build “resilience” when the source, timing or magnitude, or even existence of the next shock is unknown? Companies are looking to cut supply chain costs, not pay for resilience to threats that are theoretical at best. Logisticians who never paid attention to geopolitics are now parsing the headlines for signs of the next blunt force impact to supply chains. 
• Shipping politics in the US flipped in favor of the shipper. The impact is being increasingly felt. The new detention and demurrage rule that took effect on May 28 is a fundamental change in the relationship between ocean carriers, shippers, forwarders, and truckers. It emerged out of OSRA-22, passed despite the objections of ocean carriers, and came after years of shipper complaints to the Federal Maritime Commission regarding carriers’ detention and demurrage policies. But there are even broader impacts from an FMC emboldened to serve US shipper interests, in terms of how shippers’ complaints are handled and possibly impacting chassis. 
• What will the AI dividend in container shipping be? With the power of generative AI enabling historic breakthroughs in medicine, manufacturing, and energy, surely international shipping and logistics will not be untouched. But prior iterations in technology have brought only evolutionary – not revolutionary – change to the physical movement of goods, much of it underwhelming. Is AI any different? Is there a real dividend in the offing for the system overall for shippers, carriers, forwarders, or ports individually?

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Conference dates: March 2-5, 2025