By now it is a cliché to mention that there’s “another challenging year ahead” but it looks like 2025 will be in the books being one of the most challenging years recorded after the Covid pandemic hit. This is due to the following reasons, where each reason can act as a black swan event and will have a profound impact on every stakeholder involved in international shipping and the general public.
1. Trump Tariffs
Many importers have already front loaded what they could before President Trump started his second term and some even used airfreight to make sure the cargo arrived in the U.S. before the tariffs kicked in.
Some importers are making deals with suppliers to absorb the additional tariff amounts equally. However, at this point it is very obvious that tariffs will cause inflation as many companies will pass on the charges to end-consumers.
Another immediate impact might be on the bond coverage of the importers. Importers need to obtain a customs bond to cover their duty amount. For example, the standard $50,000 bond covers up to $500,000 worth of duties.
When additional tariffs kick in it will have direct effect on importer’s custom bond coverage amounts. Additional bonds might be needed for additional duties, and especially for small to midsize importers, this may mean additional bond amounts and even showing collateral or proof of funds.
From an ocean freight perspective: immediate tariff implementations create volatility, causing rates to fluctuate more rapidly than before.
Trump tariffs coincided with a regular Chinese New Year slowdown. Many importers are holding on to figure out how to manage this, which means less cargo, which will affect volumes and consequently will cause rates remain at lower levels (provided that everything else remains the same). The below graph summarizes how tariffs impacted the trade uncertainty in the past.
Legend:
- W: New tariff threats on Mexico June 01, 2019
- V: Stock markets fall December 01, 2018
- U: Tariffs on Chinese goods go into effect July 01, 2018
- T: Announced tariffs on steel and aluminum March 01, 2018
- S: Tariffs on solar panels and washing machines January 01, 2018
- R: USITC recommends safeguards for solar and washing machines November 01, 2017
- Q: GOP tax plan – import tax debate July 01, 2017
- P: Section 232 investigations begin (steel/alum.) April 01, 2017
- O: Tariff threat on Mexico; Trump takes office January 01, 2017
- N: U.S. Presidential Election November 01, 2016
- M: Brexit referendum June 01, 2016
2. The Reopening of the Suez Canal
There is growing optimism about the Suez Canal opening in 2025, after the Red Sea crisis disrupted the use of the Suez Canal starting in late 2023.
The number of vessels passing through the canal was down 50% in 2024 competed to 2023 and total tonnage was down around 65%. The Suez Canal crisis coincided with a huge capacity increase period for carriers, as there was 10% fleet growth which was approximately 2.8 million TEUs in 2024 and another 5.9% growth of approximately 1.9 million TEUs in 2025. Regardless of the capacity increase, freight rates remained higher in 2024. This year, if the Suez Canal opens up and carriers start to use the canal again, this will have a downward effect on rates as the equipment and service loops will return to normal.
3. New Alliances
2025 marks major changes in the way ocean carriers position themselves and their strategies vary from one another greatly. The Gemini Alliance (Maersk and Hapag-Lloyd)’s controversial hub and spoke model will be tested by increasing port congestion. MSC is positioning itself as a solo provider trying to focus on a more direct call approach. After Hapag-Lloyd’s departure, THE Alliance has become Premier Alliance (HMM, ONE, and YML). Ocean Alliance (CMA, COSCO Shipping, Evergreen, and OOCL)’s partnership is going strong. Although each carrier dictates their own pricing policies, consolidation of the alliances will give carriers more control over pricing by controlling the space and sailing schedules. I believe carriers will use capacity management where they excelled at more often in 2025 to keep ocean freight rates at certain levels.
4. Increased Port Congestion
Port congestion will be a bigger problem in 2025 than oversupply of space. Ports globally have been struggling with the increased congestion mainly as a result of the Red Sea Crisis. In 2025, major service networks are focusing on major transshipment hubs such as Singapore. Across Asia and Europe, port congestion is already becoming a major issue. If the Red Sea crisis ends and carriers immediately start using the canal again—although unlikely—the sudden surge in canal usage will further contribute to port congestion, especially at Europe and U.S. East Coast ports. This poses risks not only for service reliability but also increases uncertainty around freight rate levels.
5. Shifting Trade Patterns
2025 will also be marked as the year when major trade shifts, which had already started a few years ago due to risks related to sourcing from a single country, become solidified. China plus 1 has become a reality. Sourcing shifts to other countries will only continue to accelerate. The question remaining here is whether the receiving countries – Vietnam, India, and Southeast Asia in general – will have the capacity, know how and the reliability that the importers have been used to over the years.
S&P Global forecasts a 1.5% increase in global container demand and a decline in U.S. container volume by 4.5%.
All of the above indicates that ocean freight rates are increasingly influenced by external factors. While reactionary and seasonal increases are expected, overall rate levels in 2025 are likely to be among the weakest in recent years. This trend will persist regardless of carriers’ capacity management discipline.
