Geopolitical retaliation escalated this week as China froze infrastructure projects in Panama following Hutchison Ports' expulsion in favour of APM Terminals. Simultaneously, the "phantom" peak season forced a major Danish carrier to announce 1,000 job cuts amidst quarterly losses, while severe weather and rail congestion snarled operations in the Mediterranean and U.S. Midwest.
Weekly Market Update
The commercial dispute between Panama and Hutchison Ports over the country's strategic logistics centres has escalated into a diplomatic standoff. This comes after the decision of the Panama Supreme Court, which ruled for the annulment of the operating concession of Hutchison Ports PPC, a subsidiary of CK Hutchison, of the Balboa and Cristobal terminals. This decision of the Chinese government, which has asked for the freezing of negotiations on brand new investment projects, has been viewed directly as a response to the decision of the Panama government in picking APM Terminals as the new interim operator. This decision from the Chinese government has the implications of losing out on a multi-billion dollar investment.
The traditional cargo rush preceding the Lunar New Year has officially failed to materialize, creating a "phantom" peak season. Industry data confirms that tariff uncertainty and weak consumer demand have suppressed volumes, leaving carriers with excess capacity. The financial fallout is severe: a major Danish shipping group reported a significant ocean division loss this week and announced plans to cut 1,000 jobs to align costs with the "unwinding" of the pandemic boom. Similarly, a leading Japanese carrier reported a quarterly net loss of $88 million, citing the "weak rate environment" and a lack of volume support.
Logistics networks are battling physical disruptions on two fronts. In the Western Mediterranean, severe Atlantic storms have forced the closure of key terminals in Casablanca and Algeciras, with carriers imposing emergency surcharges. Meanwhile, in the U.S. interior, the aftershocks of recent winter storms are causing gridlock at major rail hubs. Terminals operated by BNSF and Union Pacific in Memphis and Chicago are reporting that container availability times have doubled, with drivers facing hours-long queues due to equipment malfunctions and chassis shortages.
Freight Rate Updates
Spot rates continue to soften as carriers blank sailings to manage the supply glut.
• Asia to U.S. West Coast: Spot rates have fallen to approximately $2,214 per FEU, nearly 50% lower than this time last year.
• Asia to U.S. East Coast: Carriers are reportedly offering "bullet rates" as low as $2,800 per FEU to secure cargo.
• Asia to Europe: Rates continue to soften, dropping to $2,130 per FEU as demand evaporates.
Short-Term Future Outlook
The immediate forecast is rather bleak. The Asian factories will shut down for the Lunar New Year celebration in the coming week, causing export volumes to bottom out. The carriers have made public their plans to blank over 200,000 TEUs on the Transpacific service alone in February, due to the need to avoid a total collapse in rates. The shipper may want to anticipate high volatility in service reliability and "rolled cargo," as operations attempt to resume in March.
