U.S. Economy
The U.S. economy posted strong growth last year, as the International Monetary Fund (IMF) raised its 2024 U.S. economic growth forecast by 0.2 percentage points to 2.8%. According to the IMF, the U.S. will be the only country to exceed 2% growth, followed by Canada at 1.3%, France and the U.K. at 1.1% each, Japan at 0.3%, and Germany at 0%. Meanwhile, most experts expect the U.S. economy to continue to grow strongly in 2025, with “American exceptionalism” continuing. As the Federal Reserve (Fed) enters a rate-cutting cycle, lower interest rates are expected to lead to improved corporate earnings, expanded capital investment, and robust consumer spending based on job security.
The U.S. stock market, which had its best year ever with a continued rally to record highs, is expected to maintain its bullish trend in 2025, according to most experts. According to Bloomberg, none of the 19 financial institutions, including JP Morgan, Goldman Sachs, and BofA, forecast a decline in stock prices next year, with the most optimistic forecasting the S&P 500 index to reach 7,100, about 19% higher than its current level of 5,970.84.
Maritime Cargo Market Trends
ILA, USMX contract negotiations set for Jan. 7
The International Longshoremen's Association (ILA) and the United States Maritime Union (USMX) will resume negotiations for a new master agreement on Tuesday, January 7, the Journal of Commerce (JOC) reports. Formal negotiations, which have been deadlocked since mid-November, will resume ahead of the Jan. 15 expiration of a temporary extension agreement, but the two sides are reportedly sharply divided over a key issue on the agenda: port automation. The ILA is staunchly opposed to automation technology in its ports, while USMX counters that technology, including rail-mounted gantry cranes (RMGs), can increase port productivity and provide more opportunities for long-term workers. Progress in the negotiations has been complicated by the interest of President-elect Donald Trump, who has sided with the ILA against automation. Meanwhile, five carriers (CMA CGM, Yang Ming, Hapag-Lloyd, ZIM, and MSC) announce that they will impose a Disruption Surcharge in response to the ILA's increasingly likely strike. The surcharge will range from $1,125 to $1,700 per FEU and will be implemented between January 15th and January 20th.
Project cargo (MPV/HL - Multipurpose and Heavy-lift) market forecast to 2025
A large increase in the number of container ships, bulk carriers, and RO/RO vessels delivered over 2025 and 2026 is expected to weaken non-heavy-lift breakbulk freight rates, while heavy-lift freight rates could rise significantly in the coming years due to supply constraints (see table below), S&P Global reports. In particular, a shortage of Newbuilding Deck Vessels, which are vessels suitable for carrying large and heavy equipment including modules, is expected to drive up freight rates in this segment. On the other hand, the demand for project cargoes related to energy production and power generation remains strong due to the inauguration of President Trump and is expected to increase further due to the increase in power demand from data centers due to the spread of AI, etc.
FMC Announces Requirement for Shipping Companies to Submit Annual Export Strategies
Starting March 1, 2025, Vessel Operating Common Carriers (VOCCs) will be required to submit an annual export strategy to the U.S. Federal Maritime Commission (FMC), the FMC announced. However, the rule does not apply to Non-Vessel Operating Common Carriers (NVOCCs). The export strategy under the rule must include: 1) pricing strategy; 2) services offered; 3) equipment delivery strategy; 4) description of markets served; 5) impact of blank sailing and other schedule disruptions; 6) rules and practices for sweeper vessels; and 7) alternative solutions or assistance for shippers denied vessel space. In addition, the agency stated that export strategies should be forward-looking and that carriers should submit clear information on how they plan to serve the U.S. export market.