The first few weeks of 2025 appeared to show positive signs for beleaguered shippers. The strike on the US East Coast was averted and a ceasefire in Gaza gave hope for a resolution of the Red Sea crisis.

However, the trade war kicked off in the beginning of February by US President Trump will create significant impact on supply chain patterns both in the short, medium and long term.

Before we go there, February saw the change in carrier alliances take hold. Maersk and Hapag-Lloyd bring the new Gemini network, Premier Alliance adjusts their network after the exit of Hapag-Lloyd, and MSC rolls out their stand-alone network. Shippers will have to contend with a degree of network chaos as hundreds of vessels find their way into new service patterns, but this will be temporary.

Spot rates always decline in the wake of Chinese New Year. In fact, Asia-Europe rates tend to peak several weeks prior to Chinese New Year. However, this year the decline in spot rates appears quite a bit faster than what we would assume from normal seasonality. This indicates a pricing weakness in the market.

Spot rates always decline in the wake of Chinese New Year. In fact, Asia-Europe rates tend to peak several weeks prior to Chinese New Year. However, this year the decline in spot rates appears quite a bit faster than what we would assume from normal seasonality. This indicates a pricing weakness in the market. Capacity data from Sea-Intelligence, combined with demand data from Container Trade Statistics, indicated a sharp drop in utilisation on Pacific and Asia-Europe back in November. There is typically a delay until this is fully manifested in the spot rates, but it could imply deeper drops in the weeks ahead.

Additionally, carriers are likely to focus on maintaining market share during the change-over to the new networks and a period of heightened risk of an actual price war.

The ceasefire in Gaza is for now holding up. While the Houthies have issued statements that they will not attack merchant vessels whilst the ceasefire is in effect, there is still no agreement for the period after the six-week ceasefire expires. The major carriers have all adopted a wait-and-see position for now, finding it too risky to switch back to Suez any time soon.

Should we see a more permanent peace in the coming weeks, the shift back to Suez might be quite rapid. This would once again spell chaos in the networks as they will all have to be rejigged once again and it would also create significant congestions problems temporarily in Europe.

Should we see a more permanent peace in the coming weeks, the shift back to Suez might be quite rapid. This would once again spell chaos in the networks as they will all have to be rejigged once again and it would also create significant congestions problems temporarily in Europe. However, once this is all sorted there will be significant overcapacity again, similar to that seen in Q4 2023 that resulted in loss-making rates. Since then the global fleet has grown 10.5% whilst demand has grown 6%. It is likely we will drop back to loss-making rates again for a period until the carriers begin laying up capacity. Scrapping will kick in to take out some capacity as well, but this will be a lagged effect, and not immediate as the Suez routing reopens.

In other words, peace in Gaza will lead to a turbulent period in the shipping markets.

And then there are the tariffs. These tend to change by the day, and might well have changed again from the time this is written until it is published. Presently, we look at US tariffs of 25% on Canada and Mexico and 10% on China. Mexico and Canada are now postponed for a month. We are also looking at 25% Canadian tariffs on select US goods. It is highly likely we will soon see the announcement of tariffs on the European Union as well.

In the very short term, there is not much shippers can do except pay the added tariffs.

In the medium term, we will see supply chains adapt to this new landscape, just as the tariffs on China under the first Trump presidency shifted supply chains to Southeast Asia and Mexico. The same will happen again to the benefit of some countries and ports, and to the detriment of others. Trade will follow the path of the lowest cost and there is unlikely to be a shift to manufacture in the US.

In the medium term, we will see supply chains adapt to this new landscape, just as the tariffs on China under the first Trump presidency shifted supply chains to Southeast Asia and Mexico. The same will happen again to the benefit of some countries and ports, and to the detriment of others. Trade will follow the path of the lowest cost and there is unlikely to be a shift to manufacture in the US.

In the very long term, Trump’s approach might hold the potential to more drastically reshape the global trade landscape. The US administration might change course in the coming months, but for now they are sending a clear signal to all other countries. The clear signal is that the US has become an erratic trading partner, and a trading partner with no desire to necessarily abide by any deals made in the past. This will push countries, and their companies, to seek strategies that reduce their exposure to the US. In addition, the most risky aspect is if this sense of not abiding by contracts translates into a reduced belief that the US intends to honor their debts. In that case, we could see a sell-off of US bonds and major shifts in the global economy.

About Lars Jensen, CEO, Vespucci Maritime

Lars is a leading expert and thought leader in analyzing global container shipping markets. Lars has 20 years’ experience hereof the last nine within multiple companies he has founded, with the main focus as CEO of Vespucci Maritime.
 

Receive monthly container market reports direct to your inbox.