The Last Word
2025 Annual Review & Outlook
A new , harsher world
By Peter Tirschwell
Chief among the lessons carriers learned is that disruption is OK .
Earlier this year , the commercial director at a congested Asia port apologized to an ocean carrier for the trouble caused . The response from the ocean carrier ? “ Don ’ t worry , it ’ s OK .”
It ’ s OK ? What about delays caused to the carrier ’ s customers and its reputation with those customers as a reliable service provider ? Those aren ’ t important , apparently . The message from the carrier was actually the opposite : the congestion was helpful in removing capacity , handing carriers another external shock that sent rates soaring .
In a nutshell , that is the new world of ocean container shipping that shippers and forwarders will be dealing with in 2025 and likely well beyond that .
It ’ s a world where prior patterns of cyclicality , while still a factor , must now co-exist with non-cyclical forces of external shocks combined with a long-beleaguered set of carriers that learned valuable lessons in assertiveness from the COVID-19 pandemic that they are putting to use .
“ Carriers have transformed from being weak and ready to be beaten up all the time ( pre-2018 ) to becoming bold and assertive ,” said veteran forwarder and carrier executive Sanjay Tejwani now heading consultant 365 Logistics . “ Carriers feel they have been at the receiving end for many years and now it is time to level the playing field between them and their customers .”
Chief among the lessons carriers learned , well reflected in the carriers ’ reaction to the congested terminal , is that disruption is acceptable . Though external shocks like Covid and the diversions away from the Red Sea were gifts that fell into carriers ’ laps , where they were not responsible but reaped the benefits , they had started down this road well before the pandemic by ramping up blank sailings within alliances , Tejwani said .
“ Carriers became emboldened by the fact that a few of them controlled a large amount of global capacity and we started to see better capacity management from 2018 onwards ,” he said .
And as Maersk CEO Vincent Clerc told investors Oct . 31 , carriers have still other cards to play if the market weakens in 2025 , including ramping up blank sailings , scrapping and returning chartered tonnage to owners . His message challenged the theory that overcapacity is looming in 2025 .
All of this amounts to a dramatic , indeed historic paradigm shift : carriers benefiting , on what increasingly seems like a sustained basis , at the expense of their customers . But that begs the question : how sustainable is this newly lopsided paradigm where carriers benefit from external disruption while flexing their muscles at every opportunity , and customers suffer the consequences ?
The 2022 Ocean Shipping Reform Act , though limited in scope , showed the ability of shippers to push back via government action .
But some carriers are themselves recognizing that things may have gone too far . Could it be that the zero-sum gain within containers , where one party ’ s gain is the other ’ s loss , with no mutual value creation occurring , is reaching its limits ?
“ Going into 2025 , transit times and schedule reliability will become even more important . It will be taken into account more heavily during the tender process , along with rates and other criteria ,” Yael D ’ Angeli , global head of strategic accounts at Zim Integrated Shipping Services , wrote recently on LinkedIn .
Such is the sorry state of schedule reliability , which never really recovered post-Covid , according to Sea-Intelligence Maritime Analysis , that Maersk and Hapag-Lloyd saw an opportunity to fix the problem via the hub-and-spoke Gemini alliance .
This approach flips the script on the status quo , with the pact aiming to consistently deliver 90 % -plus schedule reliability by deconstructing lengthy , delay-prone loops into interconnected component services transiting through carrier-controlled hub ports .
That level of reliability has to be sustained at basis to point in whic comes to be trusted by shippers , it will rise to the level of shipper value creation by allowing them to take out inventory .
“ For a supply chain to take out meaningful inventory costs , the reliability of the ocean leg … should be at least 95 %, because below 95 % the retailers will not trust the supply chain enough to take inventory cost out ,” a former Maersk executive told the Journal of Commerce .
“ Why is that so important ? When the client says if I only ship with Maersk I can reduce my global inventory cost by half , it ’ s a half a billion in savings , so Maersk says that comes at a cost . Thus , the aim for 95 % reliability is not casual or by coincidence , rather it links directly to what everyone says they need to deliver to take out buffer stock ,” the executive said .
email : peter . tirschwell @ spglobal . com
112 Journal of Commerce | January 6 , 2025 www . joc . com