Looming threat of tariff wars could impact container shipping next year; shippers called on to carefully consider their options
With 2024 drawing to a close, TEU demand growth is expected to settle at 4.5% for the full year, which is much higher than the underlying economic activity would suggest. This indicates frontloading is taking place to build up inventories, which should begin to neutralise next year, dropping TEU demand growth to a predicted 3% in 2025, said Xeneta’s Peter Sand and Emily Stausbøll in the recent 2025 Ocean Freight Outlook: Navigating Capacity Shifts and Rate Dynamics webinar.
Also touched upon were some other points:
That said, with the looming threat of tariff wars between the US, China, Mexico, Canada and the EU, we are likely to see much higher volumes into the US, particularly from China as shippers attempt to import goods ahead of tariffs coming into effect. As we saw in the second half of 2018 – during Trump’s first term as President – tariffs increased spot rates more than 70% from China to the US West Coast.
There is no reason why shippers shouldn’t expect a similar response from the market this time around, but Trump’s trade policy will be highly unpredictable.
When considering supply of container shipping capacity, 2024 has seen 2.34 m TEUs delivered in the first nine months, more than in any full year previously.
As Mr Sand comments: “Fleet growth of 10% in 2024 is a 16-year high. But the Red Sea disruptions and the following longer sailing distances and transit times neutralised the effect of supply growth outpacing that of demand. Looking ahead, 2025 will see supply growth outstrip demand growth too.”
MSC is the carrier expecting the highest inflow of new tonnage, with 582,000 TEU of container shipping capacity scheduled for delivery in 2025 in the form of 46 new ships (source: Clarksons). These deliveries will extend MSC’s status as the globe’s largest carrier, with the new deliveries adding to its current market share of 20%. This will afford it the scale to attempt a non-alliance approach from 2025.
With major changes to alliances in 2025, shippers should carefully consider their carrier and alliance choices to ensure reliable service and coverage for their global needs, informed a release.
Source: Exim News Service: Oslo, Dec. 8