Volatility Grows in North America: Global Trade Report

The catastrophic maritime accident in Baltimore, resulting in six fatalities, has become the costliest in history for insurers – they are facing payments totaling $4 billion. 

From an operational perspective, a key port handling 39 million tons of cargo annually is now paralyzed. Although authorities are striving to swiftly resume port activities, it will take years to fully rebuild the Francis Scott Key Bridge, a vital 1.7-mile land pathway used by 35,000 vehicles daily, including trucks transporting unloaded cargo from the port.

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The most expensive shipping accident in history. The Dali vessel three days after hitting the ridge. 

The Baltimore crisis caused by the Dali vessel has shed light on an even broader issue: growing volatility in the U.S. region. 

This includes a mix of domestic challenges – such as the Baltimore tragedy, the potential strike by the International Longshoremen’s Association (the ILA, which represents dockworkers on the East Coast and as far West as Houston, and Great Lakes dockworkers), and the potential tariff hike on Chinese goods if Trump is re-elected. International events, such as the Red Sea crisis, are also affecting the world’s second highest country for port traffic.

See our AI-powered insights into the growing volatility: 

Baltimore Crisis Exacerbates an Already Disrupted Global Supply Chain

“It’s not just a massive impact on Maryland; this has a massive impact on the national economy,” said Governor Wes Moore of Maryland following the incident. Why is the port of Baltimore so important?

The port of Baltimore by the numbers: 

  • 10th largest port for dry bulk in the U.S.
  • Top 20 port in the U.S. by tonnage
  • Second-busiest U.S. coal export hub
  • 12.5 million vehicles cross the Francis Scott Key bridge in 2023
  • Big name distribution warehouses – such as Amazon, FedEx, Home Depot, and Under Armour – are located in an industrial park near the port 
  • The port handled close to 850,000 cars and light trucks in 2023
  • The port is directly connected to 15,300 jobs, while 140,000 roles in the region are affiliated with it
  • In addition to the 12.5 million vehicles that crossed during 2023, the Key bridge is also utilized for hazardous cargo, which is forbidden in other parts of the region

Environmental Impact & Alternate Ports: Critical Insights on the Baltimore Crisis

Gov. Moore was right, the effects of the Baltimore crisis are already affecting global patterns. Here’s what you need to know.

  • Windward’s Maritime AI™ platform showed a 200% increase in ETA updates for vessels expected in Baltimore between March 25-26. Fifty-eight percent (58%) of ETA changes were still scheduled for March, while 38% already updated their ETA to April, and 4% changed their ETA to May. 
  • Shipments that are planned to arrive in Baltimore are expected to be delayed by at least 24 days, based on Windward’s Maritime AI Predictive ETA technology. 
  • There has been a 600% (!) increase in vessels that conducted long drifting activities in the North Atlantic/United States exclusive economic zone (EEZ), which might mean that these vessels are waiting to see where they will be headed and to plan their journey anew, due to the situation.
  • Among the 4,700 containers aboard the Dali, 56 contained hazardous materials, including corrosives, flammables, and lithium-ion batteries, with some already spilling into the Patapsco river. The ship also carried 1.5 million gallons of fuel and lubricant oil.
  • The incident affects not only the Dali’s cargo, which will be significantly delayed, but also a dozen vessels stuck in the Port of Baltimore. The reopening of the port to container ship traffic remains uncertain.
  • U.S. ports are starting to accept cargo initially destined for Baltimore. Windward analysis identifies Norfolk, NYC, New Jersey, Newark, Virginia, Philadelphia, Port Charleston, Savannah, and Miami as alternative ports.
  • Despite disruptions from the Red Sea crisis and the Baltimore incident, East Coast and mainland ports are positioned to accommodate redirected containerized cargo. Windward’s Port Insights report reveals that none of the major East Coast ports have demonstrated growth in TEU capacity over the past 12 months, indicating no expectation of overcapacity.
  • The capacity of alternative ports to accept specialized cargo and bulk remains uncertain. The Port of Baltimore managed nearly 71,000 cars and light trucks on average in 2023.

Adding Fuel to an Already Blazing Crisis

It appears that the Baltimore crisis is starting to impact global trade. According to Freightos data displayed in Windward Port Insights, shipping prices from the U.S.’ East Coast to East Asia increased by 80% to $1,214. Although the increase began around the middle of March, the sharpest incline happened around the last week of March. The Baltimore accident occurred on March 26. 

Shipping prices from the U.S. East Coast to East Asia/China (Source: Freightos/Windward Port Insights)

The increase in shipping prices is not occurring in a vacuum. The already busy route from the U.S. East Coast and Central America, via The Cape of Good Hope to East Asia, has seen enormous growth of containerized traffic due to the Houthi attacks in the Red Sea. 

The monthly average of container vessels sailing the route of the U.S. East Coast to China increased by 36% when comparing Q4 2023 to Q1 2024. The opposite direction, from China to the U.S. East Coast, also shows a great increase. The monthly average of container vessels sailing this route was 1.1 in 2023. In Q1 of 2024, the monthly average increased by 627% (!).

A new oceanic area experiencing significant growth in container vessel traffic is the South Atlantic Ocean. Windward data reveals that between November 2023 and March 2024, there was a 170% increase in container vessel traffic in the South Atlantic Ocean.

Ultra-large container movements illustrated. 

Additional U.S. Developments

Mexico as the Middleman: Logistics Companies are Preparing for Chinese Goods Tariffs 

The possibility of a black swan event is on the horizon in the U.S. political arena. Former President Trump announced he intends to hike tariffs on Chinese imports to over 60% if he wins the election. This unprecedented rise could cause a critical disruption to the Trans-Pacific trade corridor, necessitating a comprehensive strategic adaptation by all players in the maritime logistics sector. 

The effects of this potential tariff increase are already visible, with a reported 15% surge in shipments entering the U.S. from China via Mexico. This trend is possible due to Chinese entities setting up shop in Mexico, using Mexican ports to sidestep U.S. tariffs. Should further restrictions on Chinese goods materialize, the reliance on Mexico as a strategic intermediary in global trade is expected to intensify.

Eyeing May 17: The Potential U.S. East Coast Ports Strike

As mentioned previously, the looming possibility of a strike by the International Longshoremen’s Association (ILA) casts a shadow over U.S. East Coast ports, posing a significant threat to an already strained supply chain. This impending labor dispute injects further uncertainty into the maritime logistics landscape, prompting shippers to reevaluate their routing strategies in anticipation of potential service interruptions.

With the ILA’s master contract set to expire on September 30, and a pivotal deadline of May 17 for local contracts to be in place for master agreement negotiations, the maritime industry is on edge. Despite these approaching deadlines, Windward’s February Port Insights revealed no significant shifts in TEU capacity moving away from the East Coast. This observation underscores the maritime community’s strategic wait-and-see stance in the face of potential service interruptions.

Unprecedented Focus from Global Regulators!

Widening our lens beyond the U.S., to look at deceptive shipping practices (DSPs) and forced labor (later in this section), we see that March 2024 was calmer compared to the February sanctions spree. We did witness an interesting emerging focus from regulators. A few vessels were sanctioned for engaging in location (GNSS) manipulation, or “AIS spoofing” as the industry refers to it, in March.

Vessels such as the Lady Sofia and Artura were added to the Office of Foreign Assets Control (OFAC’s) Specially Designated Nationals (SDN) list for either directly manipulating their location, or engaging in ship-to-ship (STS) operations with a vessel that was doing the manipulation. 

This is unprecedented! While location (GNSS) manipulation was first identified in commercial use by Windward back in May 2021, it was only recently officially addressed by global regulators – both in advisories that were released and via the sanctioning of vessels engaging in this deceptive shipping practice (DSP).

For both vessels mentioned above, the oil on board the vessels was of Iranian origin. With more than 70% of confirmed location (GNSS) manipulation cases taking place in the Gulf Cooperation Council (GCC) region, possessing visibility and coverage into this area is crucial for trying to avoid doing business with illicit actors operating there.

Windward’s advanced location (GNSS) manipulation model is the only solution in the industry that offers coverage and visibility into this risky area, with 100% accuracy, and more than 2,400 confirmed cases already flagged in the platform.

Working on Forced Labor

Regulators are also looking at forced labor. The European Council and Parliament announced a provision agreement in early March to prohibit products made with forced labor from entering the EU market. The deal bans the sale or import of any product made with forced labor, in line with the U.S. Uyghur Forced Labor Prevention Act (UFLPA). The deal sets clear criteria for assessing forced labor violations and outlines investigation procedures led by relevant authorities. Involved organizations can participate in investigations, with final decisions recognized across member states.

The deal includes seafood derived from forced labor, which has long been associated with illegal, unreported, and unregulated (IUU) fishing operations. Based on Windward’s AI-powered insights, 89% of vessels marked as high risk for IUU are also marked as high risk for forced labor violations (as of April 4, 2024).

Individuals have been subjected to unsafe labor conditions and forced to work under duress on fishing vessels without proper equipment, conditions, and pay. These illegal fishing ships have been known to use tactics such as human trafficking, debt bondage, and unfair recruitment practices to coerce people into forced labor. Since the victims are often migrants or illegal workers, most of the abuses go unreported to the authorities. 

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Vessels marked as high risk for IUU and forced labor in the Windward system (as of April 4, 2024).

The link between forced labor and IUU fishing highlights the need for a smarter approach to address both issues. Efforts to combat forced labor and IUU fishing involve collaboration among governments and international organizations. While strengthening laws and regulations is important, the right tools to detect and monitor ships that are involved in IUU fishing practices are required, so they can be reported and stopped.  

Increased transparency in the seafood supply chain and consumer awareness play crucial roles in promoting sustainable and ethical practices in the fishing industry. Now, it is also necessary to ensure products are free of forced labor, aligned with new regulations, and permitted for sale in the EU.

Enhanced due diligence is also necessary to avoid, prevent, or stop IUU fishing and forced labor. Leveraging the power of AI, organizations can strengthen their efforts by utilizing advanced technologies to analyze data, track support fleet behavior, and detect potential indicators of illicit activities. This combination of enhanced due diligence and AI-driven insights can help curtail forced labor practices.

Don’t Let Your Organization Become Volatile

Unfortunately, the global supply chain and maritime ecosystem seem to be increasingly volatile, with one event after the other: the Panama Canal drought, the Red Sea crisis, the Baltimore collision, a looming strike, tariffs…what will be next?

Actionable visibility is critical, so users can better understand how trade flows are changing, detect deceptive shipping practices, and stay ahead of competitors with proprietary, AI-driven insights. 

No one knows exactly what’s next, but we do know that real-time visibility, combined with the ability to reasonably predict vessel behavior and trends, is the only way to stay calm in the face of volatile maritime and supply chain landscapes.  

I Want to Stay Calm in the Face of Volatility