Market Review – January 2025

The fragile Red Sea ceasefire has provided an opportunity to restore traffic through the Suez Canal, but uncertainties remain as carriers monitor developments closely. Simultaneously, the return of higher tariffs under revised US trade policies is influencing freight demand and routing strategies.

Seasonal adjustments following the peak holiday season are evident across air, ocean, and road transport sectors. Ocean freight rates stabilised post-Lunar New Year surges, while air freight volumes, particularly on Asia-Europe and transatlantic routes, reflect resilience despite minor rate declines. Road freight markets highlight regional contrasts, with slow recovery in Europe and stabilised pricing in the US following significant disruptions in 2023.

AIR

Air cargo demand ended 2024 with moderated growth, reflecting stabilised volumes after a strong Q3 surge. Asia-Pacific and MESA origins drove volumes, particularly on Asia-Europe and transpacific routes, where rates remain 27% and 37% higher than last year, respectively.

The transatlantic market experienced notable rate increases due to belly-hold capacity constraints and rising e-commerce demand. Seasonal post-Christmas adjustments softened overall rates by 5% to 8%, though they remain well above historical norms.

– Asia-Europe volumes dipped in December but rebounded by 26% in early January.
– Transatlantic lanes saw significant rate increases, reflecting belly-hold capacity constraints. – Seasonal softening on Asia-US routes kept volumes steady despite marginal rate declines.
– Investments in digital tracking and expanded hub operations are enhancing market efficiency.

SEA

Ocean freight markets have stabilised following Lunar New Year-driven rate surges, though long-term volatility persists due to geopolitical uncertainties and capacity fluctuations. The tentative Red Sea ceasefire raised hopes for resumed Suez Canal traffic, but carriers remain cautious, maintaining alternative routes to avoid risks.

Asia to Europe rates, while moderating from late 2024 highs, are still 62% higher than 2019 pre-pandemic averages. Transpacific rates saw a similar trend, softening in January but remaining significantly elevated year-on-year.

– Asia-Europe and transpacific rates stabilised after December peaks, supported by controlled capacity management.
– US East Coast ports benefitted from improved efficiency, ensuring steady container volumes.
– High fuel costs and infrastructure challenges continued to pressure European freight routes.
– New vessel deliveries and sustainability initiatives are reshaping long-term pricing dynamics.

ROAD

Europe continues to grapple with economic stagnation, with German truck mileage down by 0.7% in 2024. Rising costs, including a 15% increase in CO2 tolls, and labour shortages remain key challenges. Cross-border trade is projected to grow modestly, supported by improved performance in Eastern European markets like Poland and Spain.

Overland freight rates are stabilising but remain elevated. In Europe, road freight rates are under pressure from a 10% rise in fuel costs and ongoing CO2 toll increases. Cross-border trade demand is expected to bolster rate stability.

– Declining truck mileage in 2024 reflects subdued trade volumes.
– Rising operational costs and driver shortages are pressuring European profitability.
– Efforts to attract and retain drivers yet to yield meaningful results.
– Sustainability pressures are further complicating the market

Globally, digitalisation and alternative fuels are driving industry efforts to optimise fleet utilisation and reduce environmental impact. Sustainability remains a central focus as operators adapt to evolving market demands.

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.