Sea freight 2025: Making sense of a shifting market

While container shipping lines have reaped the benefits of stabilised rates and strategic capacity management in 2024, the year ahead will test the resilience of global supply chains, with shifting demand, growing capacity, and geopolitical risks.

Freight rates, while gradually declining from peak levels, remain significantly higher than pre-crisis benchmarks. General rate increases (GRIs) implemented by Asia-Europe carriers have held firm, driving rates on major routes up by over 20%. These elevated rates are expected to persist through the peak season, at least until the Chinese New Year in late January 2025.

However, as seasonal demand tapers off and new alliance networks begin operations in February, a period of relative rate stability may emerge, potentially offering a period of beneficial rates.

Global shipping capacity expanded by nearly 5% in Q3 2024, supported by minimal idling and the return of vessels previously diverted by disruptions, such as those in the Suez Canal. This has improved service reliability and eased bottlenecks in certain regions.

Despite these improvements, the risk of overcapacity remains a concern for the container carriers. With continued deliveries of new vessels and low scrappage rates, the market could face an imbalance if demand growth slows. Despite this, carriers remain bullish, adding capacity to maintain competitive positioning, but this aggressive approach may drive rates down if global trade weakens. Fleet rationalisation, including slow steaming or capacity withdrawals, may become necessary to sustain profitability.

Demand growth faces headwinds
Moderate demand growth of 3-4% is forecast for 2025, driven largely by improving global trade conditions. However, this outlook remains tempered by ongoing economic pressures. Low consumer confidence and increased import tariffs, particularly in the United States, could weigh heavily on demand for containerised goods. Additionally, weak manufacturing indices in key markets such as China and Europe signal limited growth potential in industrial output.

In the United States, unresolved negotiations at East and Gulf coast ports could lead to more ILA members strikes, triggering disruptions in mid-January, potentially diverting cargo flows. Meanwhile, tensions in the Red Sea and continued vessel rerouting around the Cape of Good Hope remain risks to capacity and transit times. While disruptions have temporarily absorbed surplus capacity, a return to normal Suez Canal operations could exacerbate overcapacity challenges.

For now, the industry remains cautiously optimistic, with a focus on stabilising operations while preparing for a potentially turbulent year ahead.

The outlook for sea freight in 2025 suggests continued demand alongside capacity constraints and cost pressures, particularly during peak seasons.

– Expert guidance: Our team specialises in managing complex shipping conditions, ensuring smooth operations even in uncertain markets.

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Don’t wait for disruptions to impact your business. For urgent or high-priority shipments, contact us today and share your forecasts. We will ensure your cargo reaches its destination efficiently and on budget.

To learn more about our tailored ocean freight solutions, please EMAIL Colin Redman.