By Vincent Wen    Photo：CANVA

The strike on the U.S. East Coast, originally scheduled for January 15, has been “tentatively” resolved after negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX). The agreement, which includes a 62% wage increase and assurances for future job security, led to an early resolution. So, will ocean freight rates have a chance to decline moving forward?

Rising Freight Rates in Q4

Let’s first examine the reasons behind the constant increase in shipping rates during Q4 2024. Uncertainty around tariffs in November and December drove global importers and exporters to rush for space and expedite shipments, pushing ocean freight prices upward. This was in anticipation of clearing goods before Donald Trump’s inauguration as U.S. President on January 20, 2025. Now that the rush to ship goods in January has subsided, freight rates have started to decline. Furthermore, the anticipated rate hike due to the East Coast strike has dissipated with its early resolution.

Causes of the East Coast Strike

The strike was primarily sparked by wage disputes and concerns among dockworkers about being replaced by automated equipment. While the interim agreement does not entirely rule out future automation, uncertainties remain. Whether further changes will occur depends on developments after Trump’s inauguration on January 20.

Short-Term Outlook for Freight Rates

In the short term, with goods already exported in advance, the market has shifted from the space shortage in December to a surplus in January. Coupled with the upcoming Lunar New Year in Asia, historical trends suggest that ocean freight rates could continue to decline in February.

Long-Term Factors Affecting Freight Rates

The tariff adjustments set to take effect on January 20 will significantly influence future freight rate trends. The primary concern for exporters is whether, under Trump’s administration, global exporters will continue shipping goods from China to the U.S. or shift exports to Southeast Asia. Additionally, the ongoing Red Sea crisis means vessels bound for Europe still need to reroute, which could impact shipping rates. These factors suggest that freight rates might surge again by March.

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