Maersk North America Market Update — September 2024
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October 10, 2024
Aimed at providing relevant and up-to-date information to help you navigate your supply chain.
Marine Updates
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Operations Resuming Post-ILA Strike on the US East Coast and Gulf of Mexico
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On Thursday, October 3rd, the International Longshoremen’s Association (ILA) reached a tentative agreement with the United States Maritime Alliance Limited (USMX) regarding wages and extended the Master Contract to January 15, 2025, for negotiations on all other unresolved issues. Work resumed in most ports along the US East Coast and Gulf of Mexico on Friday, October 4th. Although some residual delays may occur as port operations ramp up to full capacity, our team will continue to closely monitor the situation.
Macroeconomic Updates
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The U.S. Department of Commerce reported that the American economy grew at a healthy annual rate of 3% in the previous quarter, driven by strong consumer spending and business investment.
S&P Global Ratings forecasts that the US economy will grow by 2.7% in 2024 and 1.8% in 2025 (annual average). These growth projections are each 0.2 and 0.1 percentage points higher than S&P’s June predictions, partly reflecting improved financial conditions and partly due to stronger-than-expected core goods consumption.
Recent economic indicators show robust domestic demand with real GDP growing at an annualized rate of 2.2% in the first half of the year. According to S&P Global’s economic outlook, consumer demand remains strong, supported by July and August core retail sales and a rebound in auto sales. However, not all consumer data points to positive trends; actual restaurant sales, as an indicator of disposable spending, weakened during Q3, showing a downward trend. Despite this, S&P’s current estimates predict that consumer spending will grow at an annualized rate of 3.5% in Q3, the fastest pace since Q1 2023.
Ocean Market Outlook
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**Container Demand:** Global container volumes grew by 6.6% year-over-year in Q2 2024, supported by strong imports into North America and Latin America as well as sustained robust exports from the Far East region.
According to the August 2024 Global Shipping Performance Report, Maersk was the most reliable carrier with a planned reliability of 54.6% for July 2024. This marks a slight decline compared to earlier in the year but Maersk remains at the top among global carriers. Overall global planned reliability dropped to 52.1%, and Maersk outperformed the average. Additionally, Maersk showed improvements on specific trade routes, helping maintain its leadership position in a challenging market where global planned reliability fluctuated between 50% and 55% throughout the year.
Setting New Standards for Reliability and Service Quality
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In February 2025, we will launch an operational partnership with Hapag-Lloyd named “Gemini Cooperation” to provide a future network covering east-west trade. The goal of this future network is to reduce network complexity primarily through single-operator loops and fewer port calls, with each service including the most productive and operationally efficient terminals.
After careful consideration and given the ongoing security issues in the Red Sea region, we have confirmed with Hapag-Lloyd that our Cape Network will be launched on February 1st, 2025, to begin Gemini Cooperation. Due to the highly dynamic situation, Hapag-Lloyd and Maersk will return to the Red Sea when appropriate.
Once fully operational, Gemini Cooperation aims to provide industry-leading planned reliability of over 90%, ensuring efficient and flexible services in east-west trade. The Cape Network will include 29 major shipping services supporting 28 regional shuttle services operated by approximately 340 vessels with a total capacity of 3.7 million TEUs.
Air Freight Updates
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According to Xeneta’s analysis, the global air freight market continued its hot summer of demand growth in August, with average spot prices seeing significant year-over-year increases of +24%.
Xeneta data shows that the global average air freight spot price was $2.68/kg in August, driven by supply and demand imbalances. Global cargo supply growth reached the lowest annual rate since January 2024 at 2%, while global cargo demand continued to grow double-digit year-over-year at +11%. This growth has also been supported by sea-to-air shifts due to disruptions in the Red Sea region and increased e-commerce demand.
As the air freight market approaches its highly anticipated peak season, e-commerce continues to show strong growth. According to trade and transport group data, China’s exports of e-commerce and low-value goods grew year-over-year by 30% for the first seven months of 2024.
Customs Updates
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Preparing Importers for CPSC’s Upcoming Electronic Filing Requirements
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Before delving into these new requirements, let us revisit how we got here and what CPSC is. The Consumer Product Safety Commission (CPSC) was established in 1972 as an independent federal regulatory agency with the mission to protect the public from unreasonable risks of injury or death associated with consumer products through education, safety standards, regulations, and enforcement.
Since 2008, importers have been required to maintain certificates of compliance manually. However, in June 2022, CPSC announced a joint Beta pilot test seeking up to 50 participants to test this new requirement. By 2023, the commission and Customs and Border Protection had 37 importer participants enrolled in the pilot testing program, including Maersk Customs Services USA. Later that day, CPSC published a proposed rule requiring importers of regulated consumer products to submit their certificates of compliance electronically at the time of import.
This summer, CPSC expanded its Beta program testing and released an “Electronic Filing Quick Start Guide” providing more information about the program and predicting that “full implementation of electronic filing will occur in 2025 or nearby.” For importers, it is crucial to review their product catalogs to ensure whether their goods are affected and require such certification. According to U.S. Customs, products must be certified if they are finished goods subject to consumer product safety rules, bans, similar rules, standards, or regulations, imported for consumption or storage, or distributed in commerce.
Note that there is no minimum threshold exemption for electronic filing. Therefore, any product requiring certification must have an electronic certificate of compliance regardless of the value of the goods. Examples of products needing certificates include but are not limited to children’s products such as toys and clothing, carpets and rugs, drywall, mattress pads, mattresses, garment storage units, certain upholstered furniture, magnets, bicycles, etc. Additionally – even if a consumer product does not require a certificate or is exempt from all other applicable testing requirements, it must still be specifically transmitted through disclaimer codes during the electronic filing process.
The importer of record is ultimately responsible for submitting the electronic certificates of compliance for products. The proposed electronic filing regulations require submission of seven data elements when transmitting customs import information. These seven data elements are the product ID identification code for finished goods, reference code, production date of finished goods, place of production, last pass date of finished goods testing, contact information for the testing laboratory conducting the tests, and maintaining test result records.
These data elements can be submitted to CPSC by the importer of record, the testing laboratory, manufacturer, or customs broker. Maersk Customs Services USA will assist with this process.
Warehouse Updates
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Alette Mærsk Makes History in Los Angeles
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We are thrilled to welcome Alette Mærsk, our fourth large dual-fuel vessel at 350 meters long and capable of carrying 16,000 TEUs! On August 27th, Olympic gold medalist and snowboarder Chloe Kim named the Alette Mærsk during a commemorative ceremony held in the Port of Los Angeles.
Following our tradition of naming Maersk vessels after members of the founding family, the Alette Mærsk proudly bears the name of Alette Mærsk Mc-Kinney Sørensen, great-granddaughter of A.P. Moller Group founder A.P. Moller.
This is the first time in our 120-year history that a ship has been named Alette Mærsk, making this moment even more special. Powered by green methanol, the Alette Maersk sailed from Xiamen to Los Angeles, marking another milestone on our decarbonization journey with partners like Nike and Venkatesh Alagirisamy, who embraced our ECO Delivery biofuel program responsibly.
Maersk CEO Vincent Clerc stated: “The challenges ahead are immense. Shipping is large-scale, complex, and hard to decarbonize. Our new series of dual-fuel ships is just the beginning, but it’s not a long-term sustainable solution.”
Immediate coordinated action across industries is needed, along with regulations that make green fuels viable and affordable.
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