The year 2024 has been a challenging year in the shipping world. Ocean and air freight rate benchmarking and market analytics platform, Xeneta has released its 2025 Ocean Outlook.
Why does this matter? The report provides valuable insights into the market, challenges, and opportunities that impact decision-making.
Xeneta highlights that looking ahead to 2025, it’s clear that ocean container shipping will face another tough year. Disruptions from the Red Sea crisis have had a ripple effect on the supply chain.
The report also details how diversions around Africa affect TEU-mile (twenty-foot equivalent unit) demand and market capacity. “New deliveries of ships and slowing TEU-volume growth will ease some of this burden, but not enough to mitigate another major incident,” reads the report.
The Red Sea effect: Riding out the rough waters
Xeneta finds that a partial return to using the Red Sea could lead to a TEU-mile demand shift ranging from +3% to -11%.
Logistics companies and shippers alike have had to contend with disruptions this year.
The bigger picture here is that this maritime challenge is still going to plague the industry.
Disruptions in the supply chain
The logistic company personnel have probably had their heads in their hands a couple of times throughout this year, having to contend with the one bad word everyone wants to say with a whisper: Disruptions.
There is no end in sight yet. “Ocean supply chains will continue to be impacted, not only in respect of long and short term freight rates, but also transit times, capacity restraints and congestion,” reads the report.
Shippers and carriers: Challenging decision on trade lanes
Emily Stausbøll, senior shipping analyst at Xeneta says: “A large-scale return to the Red Sea seems inconceivable at present, but a partial return may be possible at some point in 2025.”
Stausbøll reveals this will create an interesting situation where shippers must choose between faster routes through the Suez Canal or sticking with carriers taking the longer route around the Cape of Good Hope.
“There will [be] much to consider, not least for the carriers who may begin to lose market share to competitors who have returned to the Red Sea, says Stausbøll.
On the watchlist: The report points out that the market could see an interesting shift if some Chinese carriers return to the Red Sea while European carriers keep diverting around Africa.
2025 Alliances: Risks, routes, and reliability
Starting February 1, 2025, three main alliances will operate on the six major fronthaul trade lanes: Transatlantic, Transpacific, Asia-Middle East, and Asia-Europe.
Peter Sand, chief analyst at Xeneta says shippers must understand what the new alliances are offering on the trades they utilize – and it’s about much more than just price.
“It is a balance between cost, reliability and transit time, while also being aware the carrier you currently use may not be the best one going forward. Keep your options open, do not be afraid to challenge carriers and seek assurances they can deliver what they are promising, particularly around service reliability,” says Sand.
Here’s Xeneta’s forecast:
Shifting alliances: Major changes in 2025 alliances will create both risks and opportunities.
Network variability: The best carrier network will differ significantly across trade lanes.
OCEAN dominance: The OCEAN Alliance will offer the most capacity and service loops in 2025.
Gemini advantage: Gemini may be the top choice to bypass congestion in Singapore.
Port call changes: Some carriers may stop servicing certain ports in 2025.
Reliability matters: Ensure carriers can deliver on their promises before committing.
Smart Shipping may be the way forward
Sand gives some advice to the businessman: “Chasing the last dollar during tenders can quickly backfire if the market is plunged into turmoil and your containers are rolled in favor of those shippers who have negotiated higher freight rates with better service levels.”
Sand adds that index-linked contracts are increasing in popularity as both shippers and service providers look for a better way of working during market shocks.
“The world is in a perilous period so managing supply chain risk and preparing for worst case scenarios has never been more important,” says Sand.
NOW READ: Air cargo eyes double-digit growth in 2024: Report
Photo Credit: Canva
Share this article
About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
