GSC’S Arsenault warns US shippers should expect big changes in 2025

David Arsenault, President at GSC Enterprises, an Oakland, California-based drayage and logistics company says that US shippers can expect supply chain challenges in 2025.

David Arsenault, President at GSC Enterprises, an Oakland, California-based firm that specializes in drayage and logistics, says that the labor situation at East Coast and Gulf Coast ports could result in a continued shift of cargoes to the West Coast.

Arsenault told AJOT that the 62% wage increase won by the International Longshoremen’s Association (ILA) in October 2024 will make cargo handling at East and Gulf Coast ports much more expensive along with the unresolved issue of automation.

Arsenault worries that the automation issue may not be resolved for East and Gulf Coast ports and could result in a labor action when the ILA contract deadline expires on January 15^th, 2025.

The shift to West Coast ports primarily benefits the Ports of Los Angeles and Long Beach because of their strong rail links to Midwest destinations. This has resulted in more intermodal moves by rail but also higher dwell times of 8-days or more.

For the harbor trucker, the intermodal moves and on-dock rail moves do not benefit harbor truckers except indirectly when transloading of containers from 40-foot containers to 53-foot truck trailers. It is one of the reasons that dray operators have become more interested in adding the transloads to their business quiver.

The reasons noted above and other issues, Arsenault says, US importers and exporters should expect a very different ocean freight environment in 2025.

West Coast Agricultural Exports

GSC has facilities in the West Coast ports of Oakland [headquarters for GSC Enterprises] and the Northwest Seaport Alliance (NWSA) consisting of the Washington State ports of Seattle and Tacoma — all ports with substantial agricultural business. Agricultural shippers give these West Coast ports a different cargo component than most US container ports. Most containerized imports are consumer products that “cube” out rather than weigh out. Also, there is a large imbalance of imports coming into most US ports versus exports. Essentially, far more full containers coming in than going out.

For that reason, a first “call” in for a port is desired by the importers moving retail goods.

The Port of Oakland is somewhat the exception to this dynamic. Oakland has consistently been an important port for agricultural exports (accounting for 37%-45% of exports) and has had a more balanced ratio of container imports to exports [1,055,949 TEU/852,346 full-TEU in 2023], although in recent years import volumes have been growing.

On November 19^th, the Port of Oakland reported that its agricultural export business remains robust: “The Port of Oakland continues to be one of the most important gateways for U.S. agricultural products. The Port exported 235,899 TEUs …of agricultural commodities as of October 2024, totaling nearly $8.5 billion. Oakland ranks number one by TEU volume in international refrigerated (reefer) export trade among United States ports.”

But the Port of Oakland’s lack of a first port of call inbound service continues to be a problem attracting shippers, Arsenault noted. Not surprisingly, many of the first calls go to either the Port of Los Angeles or neighboring Long Beach.

Although, on the bright side, Oakland continues to benefit from being the last port of call for exporters to load products, including agricultural products, before ships head to Asia and other export destinations.

Arsenault also pointed out that US agricultural exporters are having a tough time right now if they have been shipping out of the Ports of Seattle and Tacoma because of the ILWU strike and lock-out in Vancouver and Prince Rupert, Canada. The strikes and lockouts caused ships to back up at anchor at the two West Coast Canadian ports and delayed their arrivals at Seattle and Tacoma. With the strike and lock-out over, Arsenault said, there should be a normalization of sailings into Seattle and Tacoma at the end of November and going into December. The problem for US exporters is that their shipments are now delayed until there is a full normalization of service.

Carrier Alliances Shifting in 2025

Beyond the trade dynamics is a major change in how the ocean carrier schedules with major shifts in carrier alliances. And these shifts will impact ports, shippers and truckers alike.

Flexport, the supply chain and logistics platform, summarized new changes in ocean carrier alliances for 2025: “The reshuffling of ocean carrier alliances will introduce four major groups in the global shipping space, as new partnerships emerge and others dissolve:

Gemini Cooperation: A new alliance between Maersk and Hapag-Lloyd, which had a ripple effect on the former “The Alliance,” now being renamed to:

• Premier Alliance: A rebranded version of the previous “The Alliance,” consisting of ONE, Yang Ming, and HMM, but without Hapag-Lloyd.
• Ocean Alliance: This alliance remains unchanged, with CMA CGM, Evergreen, COSCO, and OOCL continuing their cooperation.
• Standalone Carriers: Like MSC, which has officially parted ways with alliances, choosing to operate independently but with new strategic partnerships on certain trade lanes.

This reshuffling signals not only a shift in power dynamics but also a rethinking of operational strategies. Each alliance is developing its unique network design, which will have far-reaching implications for global trade routes.”

Flexport says the Gemini alliance: “...will follow a hub-and-spoke model, which is widely used in many industries, such as airfreight, where main routes (or “main lines”) connect large hubs, and smaller routes (“shuttles”) serve secondary locations. However, this model is not yet common in ocean freight… One of the major benefits of this shift is greater resilience and improved reliability. Currently, the shipping market sees schedule reliability rates of 50-60%, and in good seasons, it can reach 70-80%. With this new model, Gemini is aiming for a schedule reliability target of 90%, which is significantly higher than what the market offers today. This improvement could greatly enhance service consistency and customer satisfaction.”

Arsenault says the Gemini hub and spoke model relies on feeder ship services and double handling of cargoes that is Asia will be routed through ports such as Singapore, Kaohsiung and Hong Kong. This could create problems if those services are disrupted by weather and other factors and may not result in any savings in sailing times. There is also the possibility that double-handling could result in higher costs and potential delays.

GSC Eastern Expansion

Although GSC’s activities are concentrated on the West Coast, earlier this year GSC opened an office in the Port of Savannah. Savannah was an interesting choice for an initial venture away from the West Coast. But as Arsenault explained at the time of the opening: “GSC established a larger footprint ... in the Pacific Northwest than we even have in Oakland where we are the largest tenant at the Port. But if you look at growth over the last five years, for example, in Oakland, it’s been about a 6% reduction … in volume … it was about an 11% reduction in volume in the Pacific Northwest. And then that same five-year period there was 35% growth in Savannah.”

The growing market of the Southeast makes sense: “We were densifying our relationships with clients as a third-party logistics provider … by providing chassis and yards and pull offs and transloading.”

What GSC is doing is much like other companies that started out in drayage, filling out the services offering and adding new markets.