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Container Shipping in 2025 – The Postponed Apocalypse?

Is container shipping in 2025 set for collapse, or is it just another cycle in an unpredictable industry?

This time last year, industry insiders were sounding the alarm, predicting doom and gloom for the container shipping market. Now, as 2024 draws to a close, that apocalyptic narrative has returned, with analysts once again forecasting a major drop in freight rates. This forecast, however, is hedged by the caution that no catastrophic disruptions – like those in recent years – unbalance the market’s fragile equilibrium once more.

Market Trends and the Capacity Conundrum

So, what’s causing these bleak predictions? On the surface, it’s a classic case of supply and demand. New vessels were introduced at a breakneck pace throughout 2023 and 2024, a trend set to continue well into the new year. According to Darron Wadey of Dynamar, author of the recently released DynaLiners Trades Review 2024, the fleet expansion we’re witnessing is nearly unprecedented. With an additional 470 ships – amounting to a capacity of roughly 3.2 million twenty-foot equivalent units (TEU) – scheduled for delivery, capacity growth is unavoidable.

Wadey warns that even if some ships are retired, or “scrapped,” it will be a mere drop in the ocean compared to what’s still to come. Historically, scrapping averages about 247,000 TEU per year, meaning the global container fleet could swell to a staggering 31.4 million TEU by the end of next year – a 10% annual growth, far outpacing expected cargo demand growth. This supply glut is primed to push rates down, barring any unexpected spike in demand.

In fact, if past trends held, a downturn should have already struck. After the significant capacity expansions of 2008, 2010, and 2015, the market plunged, with carriers posting major losses. Yet, in a twist of fate, 2023 and 2024 avoided this same fate – partly due to supply chain disruptions in the Red Sea region, as well as other logistic twists that kept the market afloat.

A Glimmer of Optimism Amid the Turbulence

Despite these troubling fundamentals, some shipping lines remain optimistic, seeing potential in the “legs” of the current market. Both Hapag-Lloyd and Maersk, buoyed by a strong Q3, have revised their full-year earnings projections upwards. However, industry consultants like Linerlytica remain sceptical, predicting that any efforts to raise rates (such as the scheduled 1 November General Rate Increase, or GRI) are unlikely to stick.

As the US heads into an election year, trade policies also hang in the balance. If shippers, anticipating potential tariff hikes, frontload imports, it could temporarily bolster rates. Similarly, the lingering threat of dockworker strikes along the US East Coast and Gulf Coast, set for early 2025, might push up rates. According to Xeneta’s 2025 outlook, the knock-on effects of both scenarios could ripple through global supply chains, although sustained demand growth remains uncertain.

Geopolitical Risks on the Horizon

Geopolitical tensions are another wildcard. Xeneta’s latest report cautions that instability in regions like the Taiwan Strait, Bangladesh, and the Middle East could all affect shipping lanes and carrier schedules, particularly if conflicts spill into critical trade routes like the Persian Gulf. However, Xeneta suggests that today’s shippers have more control over these disruptions than ever before, with access to advanced data analytics to monitor trade corridors and evaluate carrier reliability.

The Inevitable Cost of Overcapacity

Even in a market tilted in their favour, shippers may face a new challenge: reduced service quality. As fleets expand, the only way to balance out supply may be to take operational measures like cancelling services, skipping sailings, or “sliding” scheduled weeks. While such adjustments may stabilise supply, they’re likely to impact service quality, which is already a sore point for many shippers. Wadey believes that this reduction in service could attract regulatory attention, especially after years of record profits for carriers.

So, will container shipping in 2025 ultimately tip into a buyers’ market? Not necessarily. The market remains incredibly complex, and while shippers may benefit from lower rates, this advantage might come with a service trade-off that regulators – and the shippers themselves – are reluctant to accept.


“The question is whether container shipping will become a buyers’ market next year? And the answer to that, according to Wadey is ‘not necessarily.’”

Original article

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