4 Factors Extending 2024 International Shipping Peak Season

An interesting thing is happening right now. Despite some industry insiders prematurely calling 2024’s international shipping peak season over and dead, there is still strong container shipping numbers for October and November, particularly regarding U.S. shippers importing goods from Asia. Bill Mongelluzzo and Laura Robb, in a Journal of Commerce article, call it “an extended peak season on the eastbound trans-Pacific” and describe it as “manifesting in unusual strength for imports from Asia.”

They quote an unnamed carrier executive as saying, “What we are seeing is a fairly robust November. For four weeks out, bookings look strong.” For anecdotal confirmation, I looked at Universal Cargo’s internal numbers and found that by both shipment sales and total containers being shipped, November has bookings right at the top with the traditional peak season months that led up to it this year.

Often, ocean shipping drops significantly in November, as it’s late to import for the holiday shopping season. Air freight, on the other hand because of its speed, often sees an increase with last minute stocking and supplemental supplying for the Christmas shopping season. With a decrease in ocean freight demand, it’s common to see freight rates decrease and blank (cancelled) sailings increase in November.

Mongelluzzo and Robb report just the opposite is happening right now. Blank sailings percentages are down for November when looking at them by both year-on-year and month-to-month comparisons. Ocean freight carriers, despite already elevated freight rates, have announced general rate increases (GRIs) of around $500 to $600 per forty-foot equivalent unit (FEU) effective November 1st.

So what is making this year, when the economy – to put it kindly – has been underwhelming, have an extended peak season for transpacific shipping? Here are 4 factors, a few of which Mongolluzzo and Robb mention in their JOC article, that play into the increased importing through the U.S. West Coast.

#1 Potential 2nd ILA Strike

Since it’s one of the biggest stories we’ve been following for the last year, let’s start with the International Longshoremen’s Association (ILA) strike threat. We’ll actually touch on this issue again with the last item on this list.

The ILA went on strike at the beginning of October. That shut down East and Gulf Coast ports for 3 days. There’s now a new deadline to a potential second ILA strike: January 15th. The union has already shown its willingness to strike, and if a second one happens, it could be longer than the first.

Disruption on the East and Gulf Coasts affects shipping on the West Coast. Congestion from increased cargo on the West Coast is certainly a possibility. Container and supply shortages are possible too. Labor action on the West Coast from the International Longshore & Warehouse Union (ILWU) in support of the ILA is another concern. Even if things move smoothly through the West Coast during and after a strike, increased freight rates are likely.

All of this adds up to shippers again wanting to get ahead of another potential ILA strike, by shipping more right now, to protect themselves if worse comes to worst later.

#2 Early Chinese New Year

There’s always a little surge in imports from China before the lunar new year hits and factories across China shut down for a couple weeks as people travel and celebrate the Spring Festival holiday. The Chinese New Year brings a serious lull to the international shipping industry. The way the ebbs and flows typically work for ocean freight is the big surge through the peak season, things slow down through the holidays, there’s a surge in shipping before the Spring Festival, then a lull during the couple weeks of the holiday that often is even a longer slow period for shipping, as it can take a month from the time the lunar new year hits to when factories in China are at full operation again.

The Chinese New Year doesn’t hit on the same day every year as we’re used to celebrating the new year when the clock strikes midnight on January 1st. The Chinese New Year usually hits in February or even March. However, this year it arrives on January 29th. The earlier date moves up the surge to beat shutdowns in China. Some of that could already be taking place.

#3 Potential Tariff Increases

Some are pointing to the presidential election as a reason shippers could be importing more right now. President Trump has emphasized the use of tariffs and/or the threat of tariffs in his economic and foreign policies. During his first presidency, shippers saw a great deal of tariffs on goods from China in a full-on trade war we had with the country.

Interestingly, of all of President Trump’s policies, utilization of tariffs was the one thing the Biden/Harris Administration made no attempt to undo. In fact, it added to President Trump’s tariffs on China with additional ones of its own.

There is no clarity on what Vice President Harris would do with tariffs if she became president. However, it wouldn’t be a surprise if new tariffs happened quickly under a new term for President Trump if he wins the election next week. And it is possible, as some conjecture, that shippers are getting ahead on imports right now in case the costs increase next year. Of course, sourcing changes away from China to not only other foreign countries but domestic goods production was a popular solution to higher costs of importing from China last time Trump was president and will likely be again if he targets China hard with tariffs in a second term.

Most shippers are likely looking at their sourcing options and are in a wait-and-see mode on which countries and what commodities President Trump increases tariffs, and by how much, if he gets elected again.

#4 Diverted Cargo from the East & Gulf Coast

The last factor, as promised, relates to the first. Discretionary cargo, which shippers could transport through the West, East, or Gulf Coast, could be coming back to the West Coast.

Through the last several ILWU contract negotiations, shippers have seen expensive disruptions at the West Coast ports and delays for their cargo due to labor action. Things have been much more stable through ILA contract negotiations at the East and Gulf Coast ports. Due to this, market share that previously belonged to West Coast ports had been going to the East and Gulf Coast ports. Many thought that cargo movement had been permanently lost from the West Coast.

However, the current ILA contract negotiations changed the perception of the East and Gulf Coast ports being more stable for shippers’ goods. The close to a year of threatening a strike to the ILA actually doing it may be winning the West Coast back some discretionary cargo, increasing its market share, and helping to give a prolonged peak season for international shipping on the west side of the country.