Maritime 2025 Annual Review & Outlook
Mutually assured disruption
Continued volatility to keep container line profits on course in 2025
By Greg Knowler
The big picture : Container carriers remain in robust financial health after a highly profitable year , and that profitability looks set to continue through 2025 , with a series of geopolitical factors soaking up supply and driving demand . Despite a glut of capacity on the water , Suez Canal diversions and healthy volumes — especially on the trans-Pacific — will keep vessel supply tight , and analysts predict this will lift annual fixed-rate agreements above 2024 levels on the major east-west trades out of Asia . a pre-tax profit of $ 50 billion this year , up from $ 28 billion in 2023 . While it is a fraction of the $ 298 billion recorded in 2022 , the carriers will enter an uncertain 2025 in solid financial health . However , the steep rise in profit was not accompanied by a corresponding improvement in service levels . Port congestion was an issue through much of the year even as the Red Sea diversions became baked into Asia-Europe and Asia-US East Coast routes . Schedule reliability averaged just over 50 % in the first 10 months of the year , according to data from Sea-Intelligence Maritime Analysis .
A look ahead : The threat of higher US import tariffs and a potential second strike by dockworkers on the East and Gulf coasts are expected to drive additional frontloading of US-bound cargo , while an early Jan . 29 start to Lunar New Year festivities in Asia and ongoing Red Sea diversions will likely prompt EU importers to advance orders . In other words , all signs point to continued strong demand and
All signs point to continued strong demand and capacity constraints that will keep rates elevated .
With Maersk and Hapag- Lloyd leaving the 2M and THE alliances , only the Ocean Alliance will remain unchanged . MartinLueke / Shutterstock . com capacity constraints on the major east-west trades that will keep rates elevated , virtually guaranteeing carriers a strong first quarter and potentially setting up an early peak season similar to 2024 . Container shipping analyst Clarksons estimates nominal fleet capacity growth will slow from over 10 % in 2024 to 5 % in 2025 against an estimated 18 % increase in TEU-mile demand in 2024 and 3 % growth in 2025 . Still , carriers have had a lot of practice flexing capacity to match demand in the past few years , so cargo owners can expect tight space on ships out of Asia and an elevated spot market to push up contract rates . Banking and financial services firm HSBC said it expects trans-Pacific and Asia – Europe contract rates to rise significantly in 2025 , a dynamic that is likely to once again test shipper-carrier relationships . For shippers , however , building flexibility into those annual contracts to withstand the volatile markets will be crucial .
A look back : At the end of 2023 , the container shipping industry was staring at a bloated order book , as well as excess inventory , rising inflation and a cost-of-living crisis in major destination economies , all of which pointed to a drop in demand for imports from Asia in 2024 . But longer transits around southern Africa to avoid attacks on commercial ships in the Red Sea quickly absorbed excess tonnage , and shippers began advancing orders and building up safety inventory , leading to early peak seasons on both the trans-Pacific and Asia – Europe trades . Bottlenecks at hub ports in Asia and Europe consumed additional capacity , and as space tightened further , carriers began to cut weekly space allocations , pushing shippers to the spot market where short-term rates hit levels not seen since the COVID-19 pandemic . Carrier profitability soared and maritime consultancy Drewry has estimated container shipping will report
The next inflection : On top of ongoing uncertainty , cargo owners will navigate an extensive shakeup in carrier operations from early 2025 . In February , Maersk and Hapag-Lloyd will exit the 2M and THE alliances , respectively , to officially launch the Gemini Cooperation ; former 2M member Mediterranean Shipping Co . will commence its own standalone network ; and the remaining members of THE will rebrand as the Premier Alliance , leaving only the Ocean Alliance unchanged . The Gemini partners have promised 90 % on-time vessel performance in their new hub-and-spoke network , a standard that , if delivered , would be a significant improvement from the abysmal service levels seen in recent years and introduce a welcome competitive element to carrier negotiations .
email : greg . knowler @ spglobal . com
20 Journal of Commerce | January 6 , 2025 www . joc . com