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International Cooperation Department
Tel.: (+86-21) 65853850-8034
Fax: (+86-21) 65373125
E-mail: ICDept@sisi-smu.org
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International Shipping |
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| Box ship oversupply with tariffs, Red Sea rebound |
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Date:2025-03-13 Readers:
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ACCORDING to global consulting firm AlixPartners' 2025 Container Shipping Outlook Report: "Navigating the Crosscurrents", capacity and its deployment dominate the outlook for shippers this year as they digest the impact of tariffs, the potential rebound in Red Sea traffic and the introduction of the new alliance Gemini Cooperation.
The tailwinds from the Suez Canal diversions, industrial action at ports, and a US soft landing reversed early expectations in 2024 and resulted in container shippers enjoying one of their best years on record.
The disruptions continue this year with the potential impact of US and retaliatory tariffs combining with a wave of new capacity and efforts to remake global shipping networks, reports New York's MarineLink.
The timing of a return to normalised Red Sea routings might govern the immediate future of rates.
Buoyed by last year's profits, carriers are likely to wait and see whether Middle East ceasefires last, with an industry consensus that most of the diversions around the Cape of Good Hope won't be unwound in the first half of 2025.
According to the report, returning to normal routes will release capacity in addition to the flotilla of newbuild ships that promise to upset the supply-demand balance in shipping. A vast amount of new capacity will become available over the next five years or so, after carriers ordered a record amount of TEU in 2024, with 200 new vessels in 2025 alone.
The launch of the Gemini Cooperation between Maersk and Hapag-Lloyd on February 1 marks one of the boldest efforts to tackle the industry's reliability challenge.
If executed successfully, more than 340 vessels operating a hub-and-spoke network could offer a viable alternative to the port-to-port model. Shippers that place a high value on reliability may be willing to accept the higher charges from shuttling cargoes to their final destination.
The report notes that with the shift to three alliances, plus MSC as a standalone company, there is a significant reduction in market concentration. With the addition of a 9-10 per cent increase in capacity the reopening of the Red Sea route would trigger a significant change in competition to meet capacity.
The likely upshot: plunging ocean freight rates and a reversion to the chronic overcapacity that has long affected the industry.
https://www.shippingazette.com/news?news_id=9250300000334
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