Join our crew and become one of the 110,356 members that receive our newsletter.

Aerial top view of a containership underway

Shutterstock/Studio concept

No End in Sight: New Ships Won’t Stop Freight Rates From Climbing in 2025

The Loadstar
Total Views: 0
October 18, 2024

By Charlie Bartlett (The Loadstar) –

Some three million TEU of new tonnage arriving next year will most likely be “more than offset” by further market disruption, ensuring no respite for embattled shippers, according to Drewry.

As the prospect of more US east coast port strikes remains uncertain, the maritime consultancy drew up scenarios with a strike in January and without one, and found that in both models, freight rates would continue to rise.

Port strikes “will have significant inflationary impact on spot rates, not just on the US connected trade, but also by contagion on the other trades”, said Drewry’s Philip Damas.

“If there is no port strike, some spot rates will decline, but overall we believe there will be sufficient other factors, such as the increased emission trading system carbon taxes, which will increase by 75% from January.”

He added: “So it’s a bit of a return to increases in rates at a slow rate. Now, I should stress that global freight rates increased by 87% between pre-pandemic 2019 and this year, up 87% on average.

“Even if the Suez Canal reopens, we do not expect container freight rates will go back to pre-pandemic levels.”

Mr Damas acknowledged that a reopened Red Sea would increase shipping capacity by about 25%. But Drewry does not expect this to happen, rather that the disruption and Cape of Good Hope routing will continue until at least 2026.

“We have extended the timeline for a resumption of full-scale Suez Canal transits to 2026,” confirmed Mr Damas.

“We anticipated previously that it would be resolved by the first half of 2025… we’re seeing escalating tensions in the Middle East and we don’t see any reason to be optimistic on this front.”

On top of the strain from the Red Sea and possible strikes across the US east coast, next year’s reconfiguration of shipping alliances is expected to cause an additional setback, with Mr Damas describing MSC as “a sort of quasi single-carrier network alliance”.

“Watch for the schedule integrity of Gemini, which will be consumer-dependent,” he advised. “We have said in the past based on our experience, that container transhipment operations can quickly get caught up with delays and missed connections.”

The Loadstar is known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up
Back to Main
polygon icon polygon icon

Why Join the gCaptain Club?

Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.

Sign Up
close

JOIN OUR CREW

Maritime and offshore news trusted by our 110,356 members delivered daily straight to your inbox.