The U.S. railroad industry faces a future filled with significant uncertainty as it navigates numerous economic and policy challenges, according to the latest annual Rail Industry Outlook by the Association of American Railroads (AAR). The comprehensive report, which can be accessed here, highlights the impact of potential shifts in fiscal policy, trade, immigration, taxation, and regulatory frameworks as we head into 2025.
Despite the prevailing uncertainty, the rail industry ended 2024 on a strong note, with intermodal volumes reaching their third-highest annual figures. According to data from the IndexBox platform, consumer spending, bolstered by a robust labor market, played a pivotal role in this growth, even as coal shipments continued their decline. Excluding coal, carloads saw modest gains in December, marking a significant achievement since this growth trajectory has not occurred since 2018.
The AAR’s Freight Rail Index (FRI), which tracks seasonally adjusted intermodal volumes and carloads excluding coal and grain, reported a 2.2% increase in December from the previous month. This upward trend is a positive indicator that, despite manufacturing sector weaknesses and a complex policy landscape, the broader U.S. economy retains resilience as we transition into the new year.
Labor market insights from the AAR reveal that consumer spending continued to be robust in 2024, driven by an average of 186,000 new jobs per month, a figure comparable to pre-pandemic levels from 2010-2019. Inflation-adjusted average earnings saw consistent year-over-year growth across 20 months, supporting strong consumer activities and, by extension, rail intermodal growth.
Manufacturing, a crucial component of rail demand, struggles against the backdrop of economic uncertainties and past hindrances. Nevertheless, 12 out of 20 carload categories tracked experienced growth in 2024. Specifically, chemicals reached record carload numbers at 1.69 million, up 4.1% year-on-year, while grain exports saw an 8.5% increase, underlining a positive shift in some sectors despite overall challenges. While business confidence shows signs of improvement as we advance into 2025, spearheaded by recent surveys from the National Association of Manufacturers and the Business Roundtable, the way forward remains unpredictable.
According to Rand Ghayad, AAR’s chief economist, “The interplay between these policies will be critical in determining whether the labor market remains resilient enough to sustain consumer spending and support continued rail intermodal growth.” Railroad operators remain committed to adapting to these challenges by prioritizing customer service and economic growth throughout the coming year.
In a significant development, Chinese authorities are reportedly contemplating the sale of TikTok’s U.S. operations to Elon Musk. For more detailed information, the original report can be accessed here. According to Bloomberg News, this move comes as a strategic countermeasure should the popular social media application face a potential ban in the United States. This prospective deal could significantly reshape the competitive dynamics of the social media landscape.
Data from the IndexBox platform underscores the growing economic impact of TikTok in the U.S., with the platform reaching millions of users daily. The speculation around its sale to a high-profile entrepreneur like Elon Musk highlights both the global importance of the platform as well as the ongoing geopolitical tensions impacting tech companies.
The U.S. Department of Commerce has unveiled an expanded initiative to support American companies vying for major international investment and concession projects. The move responds to intensifying competition in global markets, particularly from strategic adversaries, and addresses industry demands for stronger tools to counter unfair foreign practices.
The expanded Advocacy Center services will focus on aiding U.S. businesses in securing contracts across key sectors like energy, infrastructure, and critical minerals. These efforts are expected to bolster the U.S. economy by fostering export growth and strengthening supply chains.
“This marks a significant step forward in leveling the global playing field for U.S. businesses while reinforcing America’s leadership on the world stage,” stated U.S. Secretary of Commerce Gina Raimondo. “Economic security is national security. By responding to the needs of our companies and building stronger commercial ties, we are creating jobs, enhancing our industrial base, and securing resilient supply chains back home.”
Since its establishment in 1993, the Advocacy Center has played a pivotal role in helping American businesses compete for major foreign government contracts. In Fiscal Year 2024 alone, the center supported U.S. companies in winning deals worth $72.6 billion, contributing to the creation of approximately 300,000 jobs.
This initiative aligns with the Biden-Harris Administration’s broader strategy to enhance opportunities for American businesses in sectors crucial to global economic development. By strengthening advocacy services, the Department of Commerce aims to sharpen U.S. competitiveness, expand export opportunities, and help American firms succeed in an increasingly dynamic international marketplace.
The container flows through U.S. ports are set to conclude on a strong note, signaling robust improvement prospects for 2025. According to a recent report by Yahoo Finance, significant end-of-year gains are driven by shippers stockpiling imports to circumvent the potential disruptions from labor issues and impending tariffs in the new year, as suggested by the National Retail Federation.
In November, American ports processed 2.17 million twenty-foot equivalent units (TEUs), as per data from the Global Port Tracker. This data set, which excludes the ports of New York and New Jersey, indicates a 3.2% decrease from October figures but marks a substantial 14.7% increase year-over-year. The NRF anticipates December volumes to rise to 2.24 million TEUs, reflecting a 19.2% y/y growth, which could drive the full-year total to 25.6 million TEUs—15.2% higher than 2023’s recorded volumes.
The potential crisis was averted as port employers and union longshoremen reached a consensus on automating container handling, thereby preventing an impending strike post the contract extension expiration on January 15. “The new contract brings certainty and avoids disruptions, and we hope to see it ratified as soon as possible,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold remarked in the release. Due to the agreement’s late finalization, retailers proactively imported spring merchandise to maintain well-stocked inventories amid anticipated disruptions.
The import surge additionally gains momentum from President-elect Trump’s tariff escalation plans, prompting retailers to navigate future consumer cost increments. The long-term ramifications on import levels, however, remain under observation.
Data projects a steady import trajectory into the next year, with January forecasted at 2.16 million TEUs, marking a 10% y/y rise. February might see a downturn by 4.5% to approximately 1.87 million TEUs, primarily due to production halts in Chinese factories for the Lunar New Year. March’s traffic could increase by 10.6% to 2.13 million TEUs; April is expected to rise 8% to 2.18 million TEUs; and May’s figures might reach 2.2 million TEUs, showing a 5.9% gain.
Underlying US inflation appears to have cooled marginally towards the end of 2024, although the Federal Reserve remains cautious in its approach to rate cuts. According to a recent report from Bloomberg, the consumer price index (CPI) excluding food and energy is projected to rise by 0.2% in December, following a consistent increase of 0.3% over the previous four months. The core CPI, which is a more accurate indicator of underlying inflation, is expected to show an annual rise of 3.3%, unchanged from the past three months.
Despite these inflationary pressures seemingly stalling, the job market continues to show strength. Government data indicated that over 250,000 jobs were added in December, surpassing forecasts, while the unemployment rate experienced an unexpected decline. This robust job market, combined with resilient consumer demand, has done little to dampen long-term inflation expectations, as a University of Michigan survey highlighted that 22% of respondents plan to purchase big-ticket items now to avoid future price increases, matching a high not seen since 1990.
Economists at major US banks have adjusted their expectations for future rate cuts in light of these developments. Federal Reserve officials suggested in December that only two benchmark rate reductions would occur in 2025, reflecting a more conservative stance compared to previous outlooks. Recent comments further imply a cautious approach to monetary policy in the coming quarters.
Contributing factors to the positive economic momentum include elevated household net worth, pent-up automobile demand, and wage growth outpacing inflation, as highlighted by economists at Morgan Stanley & Co. Upcoming consumer and retail sales data, expected shortly after the CPI report, are anticipated to confirm strong spending over the holiday season. Meanwhile, manufacturing data may signal stabilization within the industry, though at subdued levels, with a forecast of a 0.2% increase in factory output for December, consistent with November’s performance.
Global Economic Outlook
On the international front, potential US tariffs remain a hot topic in Canada as provincial premiers meet to strategize, with outgoing Prime Minister Justin Trudeau spearheading the discussions. Across Europe, the UK’s inflation data is set to take the spotlight following significant market turmoil, while economic activity indicators from China and Germany will be closely monitored. In Asia, a series of trade figures and central bank decisions will paint a broad picture of economic conditions as 2024 comes to a close. South Korea and Indonesia, in particular, are expected to make rate decisions amid differing economic challenges.
In a significant update for ocean shippers, CMA CGM has postponed its peak season surcharges on several routes to the United States. This news was initially reported by Finance Yahoo, highlighting the fourth postponement of a $1,000 surcharge from services originating from the Indian Subcontinent, Middle East Gulf, Red Sea, and Egypt to the U.S. East and Gulf coasts.
The French shipping giant’s surcharges were thought to reflect the increased costs associated with maintaining operations amid security concerns in the Red Sea, where CMA CGM remains one of the few carriers still navigating despite risks posed by Yemen-based Houthi attacks. The company has aligned with global trends of frontloading before the Lunar New Year, which typically sees Asian factories closing for extended periods starting January 29. This strategic move comes at a time when ocean carrier alliances and vessel-sharing agreements are transitioning, contributing to potential delays and congestion.
The introduction of a $1,200 surcharge taking effect on February 15 underscores an ongoing trend of fluctuating shipping costs, with factors such as alliance reshuffling further complicating the situation for shippers. CMA CGM, part of the Ocean Alliance with partners like China Cosco Shipping and Evergreen, stated that these surcharges will remain effective until further notice, ensuring synchronization with global shipping dynamics and labor agreements recently secured with the International Longshoremen’s Association covering key ports in the Eastern Seaboard and Gulf regions.
The announcement emphasizes the dynamic nature of global trade logistics, as carriers like CMA CGM navigate geopolitical challenges and operational shifts while attempting to stabilize supply chains in the face of impending peak seasons.
In December 2024, U.S. container import volumes wrapped up the year with a solid 2,367,271 twenty-foot equivalent units (TEU), just shy of the 2.4 million TEU threshold that has typically strained port capacity. This result continues a trend of higher year-on-year volumes throughout 2024. With a slight 0.1% dip from November’s 2,368,758 TEUs, December volumes mark the third time in history when imports for the month have exceeded 2.3 million TEUs. It also marks the second-highest December volume ever, trailing only the 2,389,060 TEUs recorded in December 2021. Overall, total container imports for 2024 (28,196,462 TEUs) increased 13% over 2023 (24,957,640 TEUs).
Imports from China saw a 1.7% increase to 902,519 TEUs, following two months of volume declines. Despite an 11.8% drop from the record high of 1,022,913 TEUs in July 2024, December’s figures were still 14.5% higher than the same month in 2023, highlighting the continued strength of U.S.–China trade. The upcoming Chinese Lunar New Year in late January, however, may slow trade volumes in early 2025 as trade operations in China are affected.
Descartes’ January logistics update emphasizes the strength of U.S. container imports throughout 2024, despite potential challenges ahead. In 2025, U.S. importers face risks on several fronts, including the looming threat of tariff changes under the incoming Trump administration later this month, which could significantly impact global trade. Additionally, ongoing negotiations between USMX and ILA, the Chinese Lunar New Year, and geopolitical instability in the Middle East may create potential supply chain volatility in the early months of the new year.
In this Article…
U.S. container imports reached 2,367,271 TEUs in December 2024.
2024 U.S. container imports surpass 2023 by 13%.
December 2024 imports decreased by just 0.1% over November and were 12.4% higher than December 2023.
December imports from China were up 1.7% from November and up 14.5% over December 2023.
For the seventh month in a row, the top West Coast ports captured more share than the top East and Gulf Coast ports.
Port transit delays largely improved across East and Gulf Coast ports in December while delays at West Coast ports were mixed.
The potential for incoming tariff changes threaten to disrupt U.S. trade relations.
USMX and the ILA will continue negotiations through January 15, 2025, which could impact operations at South Atlantic and Gulf Coast ports and affect U.S. supply chains.
Ongoing Houthi attacks and the Israel-Hamas conflict continue to force shipping route diversions from the Red Sea to the Cape of Good Hope.
Key points to monitor to manage supply chain risks.
Recommendations to help mitigate global shipping challenges.
Strong December 2024 U.S. container import volumes bring exceptional year to a close.
Despite a slight 0.1% decline from November, U.S. container import volumes in December 2024 reached 2,367,271 TEUs, performing exceptionally well compared to previous years. Just under the 2.4 million TEU threshold—a level that previously contributed to port congestion and delays during the pandemic—December 2024 marked the second-highest volume ever recorded for the month, trailing only December 2021 (2,389,060 TEUs) by 0.9% or 21,789 TEUs (see Figure 1). Compared to December 2020, the third-highest volume on record, December 2024 imports edged higher by 0.4% or 9,049 TEUs.
The full-year performance for U.S. container imports in 2024 demonstrates continued strength. Total imports were 28,196,462 TEUs, reflecting a 13% increase over 2023’s total of 24,957,640 TEUs. This year also marks the third-highest annual volume on record, just 0.3% behind 2022 (28,276,129 TEUs) and 3% behind 2021 (29,082,573 TEUs), underscoring the resilience and growth of U.S. trade despite global challenges.
Figure 1: U.S. Container Import Volume Year-over-Year Comparison
Source: Descartes Datamyne™
Compared to December 2023, December 2024 volumes were up by 12.4% and a remarkable 24.3% from pre-pandemic December 2019. With 2018 as the exception due to tariffs taking effect in 2019, the month-over-month change between November and December has varied historically from slight declines to low growth, with fluctuations driven by seasonal factors and market conditions related to the timing of the holiday season. December 2024 import volume maintained this pattern with a marginal 0.1% decrease over November (see Figure 2).
Figure 2: November to December U.S. Container Import Volume Comparison
Source: Descartes Datamyne™
In December 2024, container import volumes at the top 10 U.S. ports declined by 28,530 TEUs, a small 1.4% decrease compared to November 2024 (see Figure 3). The Port of Los Angeles reported the largest volume increase (up 29,261 TEUs) followed by Oakland (up 4,353 TEUs) and Baltimore (up 3,551 TEUs). The Port of New York/New Jersey recorded the largest decrease in import volume (down 31,400 TEUs), followed by Long Beach (down 25,206 TEUs) and Houston (down 7,066 TEUs). At 476,217 TEUs, the Port of Los Angeles showed its highest December volume in the previous six years.
Figure 3: November 2024 to December 2024 Comparison of Import Volumes at Top 10 U.S. Ports
Source: Descartes Datamyne™
In December 2024, U.S. import volume from China increased by 1.7% over November to 902,519 TEUs and was 11.8% lower than the peak in July 2024 (1,022,913 TEUs) (see Figure 4). Year-over-year, December imports from China increased 14.5%, reflecting the overall upward trend in 2024. Additionally, total volumes in 2024 were up 15% over 2023. The top three commodity categories (HS-2 codes) for December 2024 were HS-94 (Furniture, Bedding, etc.), HS-39 (Plastics and Articles Thereof) and HS-84 (Nuclear Reactors, Boilers, Machinery, etc.). In 2024, each of these three commodities experienced positive year-on-year growth: 3.6%, 12.9%, and 21.4% respectively. China accounted for 38.2% of total U.S. container imports in December, a 0.7% increase from November and 3.3% below the February 2022 peak of 41.5%.
Figure 4: December 2023–December 2024 Comparison of U.S. Total and Chinese TEU Container Volume Relative to Chinese Import Record
Source: Descartes Datamyne™
In December 2024, U.S. container import volume from the top 10 countries of origin (CoO) increased by 4,488 TEUs, representing a 0.3% increase from November (see Figure 5). Among these countries, China (up 14,738 TEUs), Taiwan (up 5,652 TEUs), and South Korea (up 4,750 TEUs) experienced the largest volume increases. In contrast, India (down 11,359 TEUs), Hong Kong (down 4,798 TEUs), and Japan (down 4,685 TEUs) recorded the most significant volume decreases.
Figure 5: November 2024 to December 2024 Comparison of U.S. Import Volumes from Top 10 Countries of Origin
Source: Descartes Datamyne™
West Coast ports maintain dominance in U.S. container import volumes.
For the seventh consecutive month, the top five West Coast ports continued to capture a larger share of U.S. container import volumes compared to their East and Gulf Coast counterparts. December data highlights a widening gap, with the East and Gulf Coast’s share dropping from 38.9% to 37.1%, while the West Coast’s share saw a slight decrease from 45.0% in November to 44.9% in December. Overall, the dominance of the top 10 ports weakened in December, reaching its lowest level of 2024, with their combined share falling to 82.0% from 83.8% in November (see Figure 6).
Figure 6: Volume Analysis for Top Ports, West Coast Ports and East and Gulf Coast Ports
Source: Descartes Datamyne™
U.S. port transit delays improve overall.
Overall, transit delays have decreased across the top 10 U.S. ports, with notable improvements on the East Coast. On the West Coast, Tacoma and Long Beach experienced the most significant increases, with delays rising by 2.4 days and 0.8 days, respectively. Other West Coast ports showed improved transit times, with the largest reductions in delays seen at the Port of Los Angeles, which improved by 1.6 days, and Seattle, which saw a 1.4-day decrease. Despite some regional fluctuations, delays across the top U.S. ports generally trended positively in December.
Figure 7: Monthly Average Transit Delays (in days) for the Top 10 Ports (Oct. 2024 – Dec. 2024)
Source: Descartes Datamyne™
Note: Descartes’ definition of port transit delay is the difference as measured in days between the Estimated Arrival Date, which is initially declared on the bill of lading, and the date when Descartes receives the CBP-processed bill of lading data.
Gulf Coast imports drop significantly in December 2024.
December Gulf Coast imports (215,069 TEUs) fell by 17.8% from November (261,523 TEUs), the largest month-over-month decline in 2024 and the third-lowest volume after April (214,245 TEUs) and July (211,961 TEUs) (see Figure 8). This sharp decline in volumes may be an anticipatory market response to the looming ILA strike. With the lower volumes, port transit times at Gulf Coast ports improved significantly in December, with overall delays decreasing by approximately 70 days from approximately 228 days in November.
Figure 8: January 2023 to December 2024 U.S. Gulf Coast Container Imports
Source: Descartes Datamyne™
Tariff changes threaten to increase the complexity of global trade.
With the incoming Trump administration signaling intentions to implement broader and deeper tariffs on a range of commodities, emphasizing imports from China, Mexico and Canada at this juncture, there is heightened uncertainty surrounding the global trade environment. While it is possible that, in the coming months, some U.S. importers may pull shipments forward in anticipation of tariff changes, U.S. container import volumes currently show no definitive response from the market through December.
Escalating Houthi attacks continue to disrupt trade across the Red Sea.
Houthi rebels intensified their attacks on vessels in the Red Sea throughout December, including strikes targeting U.S. cargo ships and warships. The U.S. Navy has been actively defending against these assaults, but the ongoing attacks have significantly disrupted shipping and slowed trade in the region. These disruptions are also contributing to rising global shipping costs. If the Middle East continues to destabilize, global trade conditions are likely to become even more volatile, further straining international supply chains.
USMX and ILA resume contract negotiations ahead of January 15 deadline.
The United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) resumed contract negotiations on January 7, 2025, following a tentative agreement in October to extend the bargaining period until January 15. While negotiations paused in November due to a standstill, both parties are now returning to the table with less than two weeks to reach a deal. In the meantime, volumes at East Coast and Gulf Coast ports are declining as importers are potentially exploring other options in anticipation of potential disruptions. If the ILA and USMX are unable to reach an agreement by January 15, supply chain disruptions at these critical ports may follow.
Managing supply chain risk: what to watch in 2025.
U.S. container import volume was just shy of the 2.4 million TEU mark in December 2024, decreasing only 0.1% from November volumes. The economy continues to exceed expectations, however, the anticipation of incoming tariffs, approaching deadline for the ILA/USMX agreement, and the ongoing conflict in the Middle East may create challenges for global supply chains. Here’s what Descartes will be watching in 2025:
Monthly TEU volumes between 2.4M and 2.6M. This level will continue to stress ports and inland logistics until infrastructure improvements are made. December 2024 imports fell just shy of the 2.4M level; however, elevated volumes do not appear to be putting undo pressure on U.S. ports.
Port transit wait times. If they decrease, it’s an indication of improved global supply chain efficiencies or that the demand for goods and logistics services is declining. December 2024 transit delays improved among East and Gulf Coast ports while West Coast ports saw mixed increases and decreases.
Expanded tariffs and other potential ‘protectionist’ trade policies. Depending on the short- to medium-term priorities of the incoming Trump administration, concerns about broader and deeper tariffs applied to a wide array of goods could compel U.S. importers to significantly re-engineer their supply chains, putting additional pressure on global logistics infrastructure. The impact of potential tariffs on recent monthly U.S. container imports appears to be minimal currently, as volumes have proven strong throughout 2024, and port transit time delays have remained relatively stable.
The economy. The U.S. is an import-driven economy, so economic health is an important indicator of container import volumes. Following the November Federal Open Market Committee (FOMC) meeting, the Federal Reserve borrowing rate was lowered 25 basis points to 4.25% while reported inflation was 2.7%. According to the Bureau of Labor Statistics November employment report, the unemployment rate remained mostly unchanged at 4.2% while employers added 227,000 jobs.The next FOMC meetingis scheduled for January 26-27.
Middle East conflict. Houthi attacks are continuing to influence carriers to forego the Suez Canal, extending transit times around the Cape of Good Hope. The impact of diversions away from the conflict is still minimal on volumes or transit delays for East and Gulf Coast ports.
ILA/USMX contract negotiation. Negotiations resumed January 7th. With the January 15, 2025, deadline approaching, it will be important to monitor this situation until a final contract is ratified.
Consider recommendations to help minimize global shipping challenges.
U.S. container import volumes in December continued to demonstrate the robust performance seen throughout 2024. Although imports for the month fell shy of the 2.4 million TEU threshold, they still performed exceptionally compared to previous years, exceeded only by December 2021. Meanwhile, ILA/USMX contract negotiations have resumed, with the expiry of their temporary agreement nearing. Adding to the uncertainty, the ongoing conflict in the Middle East is exerting increasing pressure on global supply chains.Further complicating the trade landscape, the potential introduction of new tariffs by the incoming Trump administration could significantly impact global trade flows and force supply chain re-engineering. Descartes will continue to monitor and share key insights using Descartes Datamyne, along with U.S. government and industry data, to provide valuable perspectives on global shipping trends in the months ahead.
Short-term:
Monitor port volumes and delays to assess trade disruptions as imports remain between the 2.4M and 2.6M levels that have historically stressed U.S. maritime logistics infrastructure.
Consider modelling the impacts of increased tariffs on imported goods, and whether a change in sourcing strategy could mitigate potentially higher costs.
Track the Middle East conflict as carriers divert shipping around Africa, impacting shipping capacity and timeliness.
Evaluate the impact of inflation and the Russia/Ukraine and Israel/Hamas conflicts on logistics costs and capacity constraints. Ensure that key trading partners are not on sanctions lists.
Near-term:
For companies that have cargo moving through the Suez Canal, evaluate the impact of extended rerouting caused by Middle East conflicts.
Long-term:
Evaluate supplier and factory location density to mitigate reliance on over-taxed trade lanes and regions of the globe that have the potential for conflict. Density creates economy of scale but also risk, and subsequent logistics capacity crisis highlights the downside. Conflicts do not happen “overnight” so now is the time to address this potentially business disrupting issue.
Planning an international excursion this year? There’s good news for travelers willing to venture afar, as long-haul flights have become more affordable compared to last year. According to data released by flight-tracking company Hopper, flight prices from the U.S. to Asia have dropped by 11%, with fares now averaging $1,087. This decrease comes alongside a 6% increase in capacity expected through mid-2025.
Savvy travelers can also find more affordable flights to Europe, with prices falling 6% to an average of $754. However, flights to Africa and the Middle East have remained steady, while South American routes are 4% cheaper, costing around $685.
IndexBox data further corroborates these trends, highlighting an overall increase in flight search interest and capacity expansion to popular global hotspots. Despite flat airfares to Africa and the Middle East, travel operators are witnessing significant demand in regions like Japan, which has seen a surge in international visitors by nearly 50% within the first 11 months of 2024, totaling close to 33.4 million people.
This drop in airfares comes as airlines have adjusted their strategies, ramping up capacity to meet balanced demand levels post-pandemic. The decrease in ticket prices is partly attributed to favorable currency exchange rates, making destinations like Japan more attractive to U.S.-based travelers.
In parallel, Kayak reports indicate declines in Caribbean airfares, with significant reductions seen in flights to Dominica (down 21%), Barbados, and St. Lucia (each down 17% compared to last year). Moreover, business class tickets have become a point of renewed interest, with searches for these lucrative seats rising by 19% over last year, suggesting an increased willingness to splurge on travel comforts.
As Delta and other airlines gear up to report their earnings for 2025, they face a complex pricing landscape where discounts on international flights could potentially drive a resurgence in overseas travel, capturing the interest of both economy and premium class passengers.
The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have reached a tentative six-year Master Contract, averting a potential supply chain crisis at East and Gulf Coast ports. The agreement was finalized just days before the critical January 15 deadline, ensuring stability in a sector vital to the U.S. economy.
This breakthrough follows months of tension, including a three-day strike in October that concluded with a temporary contract extension and agreements on wage increases. However, the divisive issue of port automation lingered unresolved until now.
In a joint statement, the parties emphasized the contract’s dual focus on safeguarding jobs and embracing modernization. “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf Coast ports. These measures make operations safer, more efficient, and ready to meet growing demand,” the statement read.
The agreement averts a port crisis during the final days of the Biden administration and as President-elect Donald Trump prepares for his January 20, 2025 inauguration. Trump, a vocal opponent of port automation, has historically supported the ILA, which represents approximately 45,000 longshoremen. He has argued that automation’s cost savings do not justify its impact on American jobs.
USMX, which includes foreign container carriers, direct employers, and port associations operating on the East and Gulf Coasts, has faced increased scrutiny amid shifting shipping patterns. Recent data highlights the disruption caused by labor uncertainties, with West Coast ports handling 10.1% above their 52-month average in November, while East and Gulf Coast ports saw a 3.4% decline.
Industry stakeholders, including the National Retail Federation, anticipate ongoing growth in U.S. container imports, fueled by fears of disruptions and proposed tariff increases by the incoming administration.
While specific terms of the agreement remain confidential pending ratification by ILA members and USMX stakeholders, early reactions have framed the deal as a significant win. By balancing modernization with job protection, the contract is expected to bolster the supply chain, benefiting consumers, businesses, and the broader economy alike.
In a recent revelation, the US labor market continues to show signs of deceleration even as layoffs remain notably low. Data from ADP indicates that only 122,000 private payrolls were added in December, a decline from the 144,000 additions seen in November. This dwindling pace of job creation comes as a broader trend reflecting ‘no hire, no fire’ stasis takes shape, with labor market metrics illustrating a cooling trend.
According to the US Department of Labor, initial jobless claims dropped to 201,000 for the week ending January 4, which is not only a reduction from the previous week’s figures but also below the anticipated 215,000. ADP’s chief economist Nela Richardson attributed the labor market’s current stability to low layoffs and reduced quit rates, a sign of growing caution among workers.
The November Job Openings and Labor Turnover Survey (JOLTS) report revealed a slight drop in the hiring rate from 3.4% in October to 3.3% in November, while the quits rate declined to 1.9% from 2.1%. Both indicators now sit well below their pre-pandemic levels.
As the Federal Reserve continues to focus on these dynamics, Chairman Jerome Powell emphasized in December that while the labor market appears looser compared to pre-pandemic times, the cooling process remains ‘gradual and orderly’. The central bank believes further cooling is unnecessary to achieve their inflation target of 2%.
Market analysts, including IndexBox platform data, anticipate that the upcoming December jobs report might further underscore these trends, with expectations of 163,000 new jobs being added, down from November’s 227,000. However, the unemployment rate is expected to remain steady at 4.2%.
