The global logistics landscape over the past year has been characterized by the industry’s perpetual need to adapt to longer transit times at sea and a constant threat (and sometimes execution) of labor stoppages at global ports.
Out on the oceans, 2024’s biggest recurring issue can be traced back to last November, when Yemen-based Houthi rebels hijacked the Galaxy Leader commercial ship in the Red Sea.
Since that incident, the Houthis have launched missile and drone attacks on ships passing through the waterway all throughout 2024—forcing major container shipping lines including Mediterranean Shipping Company (MSC), Maersk, Hapag-Lloyd and CMA CGM to suspend most of their transits through the waterway and the Suez Canal.
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According to container shipping consultancy Clarksons Research, 22 percent of global seaborne container trade traditionally transits through the Suez Canal. But much of that number has since shifted its way around the southern tip of Africa’s Cape of Good Hope, which is now the preferred route of the ocean carriers on East-to-West shipping routes. That mass diversion often can result in longer shipping routes anywhere from one-to-three weeks.
While the Suez Canal saw 75.4 daily transits on average on Nov. 18, 2023, the day before the Galaxy Leader hijacking, that average sunk to just 33.1 transits on Oct. 17, 2024, according to data from UN Trade and Development. The canal itself took a monumental financial hit throughout the year due to the slowdown in traffic, with revenues plummeting 60 percent.
Some in the apparel industry—particularly those in Europe—had to adapt to the rerouting earlier this year. For example, Adidas said in March that it had been experiencing two-to-three-week delays due to the rerouting, while Zara parent Inditex acknowledged one-week delays.
Skechers noted in July that the supply chain disruptions and shipping delays from the crisis forced the footwear brand to shift more deliveries into the second half of 2024. Most recently, women’s specialty retailer J.Jill said one-week interruptions remain the norm, thus making the company order earlier to offset the delays.
Of all the impacts on importers, the longer routes and decreasing capacity as the crisis lingered resulted in higher freight costs. Retailers including Abercrombie & Fitch, Levi Strauss & Co. and Guess have all cited increasing rates and a subsequent pressure on margins due to the mass reroutings.
“Red Sea diversions are still the biggest contributor to rates that remain at least double their level a year ago,” said Judah Levine, head of research at Freightos, in a December freight update.
As of Dec. 19, ocean freight rates were $3,803 per 20-foot equivalent (TEU), soaring 129 percent from the year prior, according to Drewry’s World Container Index (WCI). These freight rates peaked as high as $5,927 per TEU on July 18.
In a conversation during the SJ Fall Summit in November, Thomas Kempf, senior director of global air freight for Flexport, said the Red Sea crisis has essentially been “baked into” the current impacts on the logistics industry.
“It’s baked into rates; it’s baked into transit time, selling schedules, all of that,” Kempf said.
Unfortunately, it appears the diversions of the Red Sea will appear to be the norm throughout 2025, with Maersk and Hapag-Lloyd already prepping their Gemini Cooperation alliance to move shipments via the Cape of Good Hope.
Japan-based Ocean Network Express (ONE) isn’t taking any chances with a Red Sea return either.
“There seems to be no political breakthrough, we can’t put the vessels, the cargo, the crew at risk,” said ONE CEO Jeremy Nixon in a September panel. “The supply chain has adapted and, that’s going to be business as normal.”
Calamity at global ports dominates 2024
As the Red Sea situation played out, brands also had to follow along with constant holdups at ports both at home and abroad throughout 2024. Work stoppages, strike threats, natural disasters, government overhauls and IT outages were just a few of the many scenarios giving shippers concern throughout the year.
Through the summer and early fall, companies imported more goods into the U.S. earlier ahead of a potential labor strike of 45,000 dockworkers at the East and Gulf Coast ports.
Goetz Alebrand, head of ocean freight Americas at DHL Global Forwarding, told Sourcing Journal in late May that the industry was experiencing “a peak season at a moment where it’s not supposed to happen” due to the influx of cargo.
After more than a year of being unable to reach a contract agreement with its employers, the United States Maritime Alliance (USMX), the International Longshoremen’s Association (ILA) went on strike for three days from Oct. 1-3.
The union went back to work after the third day upon reaching a tentative deal on wages, but it took two-to-three weeks for ports like New York and New Jersey, Charleston and Savannah to clear out the container backlog that had piled up as ships awaited outside the hubs.
“The additional costs from [pre-strike] mitigation efforts as well as post-strike resumption are still being felt,” said a letter to ILA president Harold Daggett and USMX chairman and CEO David Adam in early December from a National Retail Federation (NRF)-led coalition.
One mass merchant, Target, had “higher-than-expected” supply chain costs and more inventory that normal after the strike.
“In order to protect our in-stocks and ensure we’re ready for Q4, our team changed the timing of certain shipments and directed a portion of our receipts to other ports” on the West Coast, said CEO Brian Cornell during a November earnings call.
While the return to work temporarily paused concerns of a long-term labor stoppage, the state of the East and Gulf Coast ports remains up in the air for 2025. Both parties are still fighting heavily on automation, with the ILA’s current contract extension set to expire Jan 15. If a new deal isn’t made before then, the ILA would go back on strike.
North of the border, major ports in Canada endured work stoppages of their own in the form of lockouts just weeks after the U.S. strike, both in British Columbia’s Vancouver and Prince Rupert ports and in Quebec’s Montreal and Quebec ports.
The twin labor lockouts were sent to arbitration by the Canadian government after contract talks across the unions and their respective maritime employers hit a total impasse. When the back-to-work order was issued on Nov. 12, container shipments entering Montreal were at a standstill with all its terminals closed, while vessels piled up amid delays in the Ports of Vancouver and Prince Rupert.
According to the Canadian Chamber of Commerce, the disruptions affected port activity that handled roughly $1.2 billion Canadian dollars ($860 million) of goods per day.
Strike action also took place in Germany, where are series of daylong “warning strikes” disrupted several ports during the summer over wages for 11,500 union dockworkers.
Impacted ports included Hamburg, Bremen, Bremerhaven, Wilhelmshaven, Emden and Brake. That wage dispute between the German trade union Ver.di and the Central Association of German Seaport Companies (ZDS) was settled in early September after five rounds of negotiations.
The new collective agreement will last through July 31, 2025.
The simple threat of a strike, such as that in India, dealt shippers plenty of uncertainty when looking to enter and exit the country’s 12 state-owned ports.
An indefinite strike that would have taken place Dec. 17 was called off when India’s government pushed union employers to implement revised contract conditions including wage adjustments and pension benefits that had been initially agreed to in the late summer.
Those assurances had not been met since a new deal for 18,000 dockworkers was first reached in August. That work stoppage would have cost Indian exporters nearly $15 million daily, according to The Hindu Business Line.
Not all port problems in 2024 have come because of labor negotiations. Top global hubs in China and Southeast Asia like Singapore, Shanghai, Ningbo and Kelang have experienced lengthy congestion periods throughout the year as a knock-on effect of the later deliveries impacted by the Red Sea crisis.
And in Bangladesh, the nationwide protests over the summer that resulted in the ouster of Prime Minister Sheikh Hasina’s government ended up forcing Chattogram Port to close for six days in June.
The closure created a ripple effect as trucks and vessels alike piled up outside the hub, and containers across terminals were unable to be moved. At one point in August, average berthing delays rose to seven to 10 days, while loading and unloading times had doubled at vessels docked at the port.
Chattogram Port, Bangladesh’s largest seaport, endured a brief two-day strike to close out December after seven ship crew members were murdered onboard a vessel headed to the port.
Port snags don’t always have to be localized to one region even if one incident is the catalyst, retailers and brands have come to realize.
A global IT outage grounded thousands of flights worldwide in July, temporarily disrupting the international flow of air cargo and briefly disrupting activity at the Ports of Los Angeles, Long Beach and Houston.
Houston had to close its two container terminals for multiple hours in the morning after the outage took place. Similarly, the U.K.’s Port of Felixstowe had been disrupted, with truckers unable to enter its terminals for a brief period, while rail operations were momentarily shuttered.
