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2025 around the corner

We are now rapidly approaching the end of 2024, a year that has unfolded very differently than expected. A sudden escalation of the conflict with the Houthis in the Red Sea led to a revision of shipping routes around Africa, radically upending the balance between supply and demand.

With 2025 in sight, now is a good time to take stock: what do we already know, and what remains a question mark for the time being? Let’s start with the facts, as there are plenty of those.

Large freight volumes and economic progress 

Freight volumes in 2024 have shown strong growth. Preliminary data indicate that, in the first 10 months of this year, 6.2% more containers were shipped worldwide compared to 2023. Before the pandemic disrupted supply chains, global freight volumes typically kept pace with the growth of the global economy, as measured by gross domestic product (GDP). For 2024, global GDP is expected to have grown by 3.2%, which supports the remarkable increase in freight volumes.

At the same time, the supply of capacity, measured by the size of the container ship fleet, increased by over 10% in 2024. An additional 6% growth is expected for 2025. By the end of 2023, there was already overcapacity in the market, causing many container shipping companies to start incurring losses. The reality is that overcapacity has only increased further in 2024.

We also know that when we measure demand in TEU Miles – considering the longer shipping routes around Africa – growth amounts to 26%, rather than the 6.2% reflected by container volumes alone. This explains why, despite the underlying overcapacity, the market in 2024 has still faced a shortage of capacity and sharply rising freight rates.

Network disruptions and changing import patterns

We know that shipping lines will restructure their liner services in February 2025, when the new alliance partnerships take effect. This will lead to significant disruptions in service offerings immediately after the Chinese New Year.

Finally, it is a fact that Donald Trump is set to return as President of the United States. He has announced plans to impose import tariffs on several countries. These measures will prompt importers to bring their shipments forward, a shift that is already underway.

This means that, barring any new unexpected events and with the crisis in the Red Sea persisting, 2025 will see a situation where the balance between supply and demand continues to lean toward full ships – albeit not at the exceptionally high levels of 2024. Additionally, there remain unknown and unpredictable factors that could influence the market outlook.

It is uncertain how the shipping lines will act when implementing their new networks. However, it seems likely that they will have two main priorities. First, carefully managing the operational aspects during the setup of the new networks. Second, retaining their customers throughout this transition period.

The first element carries the significant risk that much less capacity will be removed from the market than usual after the Chinese New Year. Combined with a strong focus on customer retention, this could lead to a sharp drop in spot rates in February and March as the market navigates through this transition phase.

If this scenario unfolds, it can be expected that this period of low rates will be temporary. Once the new networks are implemented and the peak season of 2025 approaches, freight rates are likely to recover sharply.

A fleet of "black swans" 

2025 can best be described as an upcoming rollercoaster ride for freight rates, with a high degree of unpredictability driven by geopolitical developments directly impacting the shipping industry. It may be more realistic to expect not just one “black swan,” but an entire flock.

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