Market Review – February 2025
As we progress through Q1 2025, the global freight market is adapting to changing demand patterns, regulatory shifts, and economic pressures.
Air cargo rates remain firm, defying expectations of a post-Lunar New Year decline, while ocean freight continues to experience rate volatility, alliance reshuffling, and capacity constraints.
Meanwhile, road freight spot rates show signs of stabilisation, though cost pressures and driver shortages persist across key regions.
As eCommerce growth, supply chain resilience, and sustainability pressures shape the industry, businesses must remain agile and forward-thinking to navigate these evolving conditions.
AIR
Despite concerns of a post-Lunar New Year slowdown and US trade policy disruptions, air cargo rates remain steady, with some routes experiencing moderate price increases. While the suspension of the US de minimis exemption briefly unsettled eCommerce shipments, the market has demonstrated resilience, supported by stable demand on key trade lanes.
Freight rates on the China-Europe and China-US routes have increased slightly, with Shanghai outbound rates rising 8% week-on-week. While Hong Kong rates dipped slightly, they remain significantly higher than last year.
- Stable airfreight rates despite seasonal and policy-driven disruptions.
- China-Europe and China-US routes seeing gradual rate increases.
- eCommerce uncertainty persists, but demand remains strong across major markets.
- Market resilience continues, with a cautious outlook for Q2.
SEA
The ocean freight market is navigating a complex landscape, with global shipping capacity expanding by 5% and ongoing regulatory and economic shifts. The Shanghai Containerised Freight Index (SCFI) has fallen 17%, primarily due to the resolution of the US East Coast port strike, but rates remain volatile, impacted by carrier alliance reshuffles and Red Sea disruptions.
Global port congestion reached a three-month high, particularly at Chinese ports leading up to Lunar New Year. Meanwhile, 30% of Far East westbound sailings are expected to be blanked, keeping market conditions tight. The coming months will likely bring continued instability, though some stabilisation is expected in Q2.
- Capacity constraints and port congestion remain key challenges.
- SCFI down 17%, but freight rates remain volatile.
- Far East demand remains strong, despite blanked sailings.
- Carrier alliance restructuring is expected to disrupt trade flows into Q2.
ROAD
The European road freight market saw modest rate growth in Q4 2024, with the benchmark index rising to 123.9 points—a 0.5-point quarterly increase. However, rates remain 1.0 point lower than a year ago, reflecting underlying economic pressures. While spot rates are stabilising, the market remains sensitive to supply chain disruptions, driver shortages, and rising fuel costs.
A driver shortage of 500,000 positions across Europe continues to strain capacity, while diesel prices rose by 4.6% in Q4 after reaching a two-year low in September 2024. In the UK, diesel prices settled at 142.91p per litre in January 2025, providing some relief but failing to offset broader economic pressures.
- European road freight rates stabilising, but still below 2024 levels.
- Driver shortages and rising fuel costs continue to impact operations.
- Retail trade activity rose 4% in Q4, increasing transport demand.
- Future growth depends on economic recovery and shifts in demand patterns.
As the freight industry adapts to market fluctuations, businesses must remain strategic and resilient to navigate evolving challenges and capitalise on emerging opportunities.
In today’s dynamic logistics landscape, staying ahead is key to ensuring supply chain resilience. PSP Worldwide offers actionable insights and tailored solutions to help you overcome market challenges and seize emerging opportunities.
To learn more about how we can support your supply chain, EMAIL Colin Redman, managing director, today.