Volatility in ocean freight rates continues, now on the downside: International freight insights APAC February 2025
- levyjeffrey
- Feb 4
- 10 min read
The China Containerized Freight Index (which is the best index for spot ocean freight between Asia and Australia) showed spot ocean freight rates China to Australia decreased 6% for the January 2025 month to 24/01/2025. There is no full month measure available due to it not being measured as a result of the Chinese New Year public holiday period. Rates for China to all global routes decreased 2% over the same time period. Shanghai Containerized Freight Index which often slightly leads the China Index decreased 12% over the same time period of January 2025 month to 24/01/2025.
Drewry Composite Index that measures ocean freight rates globally decreased 14% for January 2025. Drewry Intra-Asia Container Index showed rates decreased 18% for January 2025.
Access ZG’s indicators from Asia freight forwarders are that spot ocean freight rates offered by some carriers to Australia decreased by up to a staggering 47%. These January 2025 international ocean freight observations don’t match the Index results stated above. In fact are drastically different for the past month. This is due to extreme rate volatility and the index lagging by up to a few weeks the information Access ZG sees in both other metrics and on the ground with Asia freight forwarder and shipping line quoted rates. Also the final week of the month’s data is not reflected in the Index’s due to Chinese New Year public holiday.
The next months are likely to remain volatile as there’s so many factors at play. These include some of the biggest shipping line alliances restructuring & subsequent competition for market share. Whether the Middle East ceasefire holds as well as whether the ceasefire actually results in ships re-transiting the Red Sea (see articles below). This is critical for global ocean freight pricing. There’s the threat of increased global tariffs and frontloading of inventory due to supply chain uncertainties. Also, shipping lines have showed they will drastically raise freight rates at the prospect of any potential global disruptive supply chain event. Getting quality early information is as important as ever in this extremely volatile market.
Air freight rates (full-market mix of spot rates and contract rates) decreased 8% approximately for the month of January 2025 (per World ACD Air Cargo Market Trends report). Baltic Airfreight Index showed an 11% decline in January 2025, following steep rises seen from mid-October to mid-December 2024. Rates are back down to mid-October 2024 rate level pricing before the steep increases.
Ex Asia Pacific air freight rates decreased 5% approximately for the month of January 2025 (per World ACD Air Cargo Market Trends report). However, Intra Asia Pacific rates increased 6% for the month bucking the trend of decreasing air freight rates on other trade lanes.
Prior International Freight Insights APAC newsletters can be viewed here: access-zg.com/blog
Reply to arrange a no obligation discussion via your choice of phone call, Zoom online or face to face (for those based in Sydney) and see below for January 2025 high value article highlights:
Alphaliner leads debate on short-term carrier overcapacity
Alphaliner forecasts that there is little chance of overcapacity in the container shipping market in 2025, with the analyst saying it is impossible to predict when overcapacity will arise again. Analysis of the current container fleet shows it increased by nearly 3 million TEUs last year, or by 10.6%, with some 59% of this new capacity deployed on the Asia to Europe trade which had diverted around the African Cape.
Box lines offer reduced Asia-Europe rates ahead of alliance restructure
Liner operators are discounting Asia-Europe freight rates for the first two weeks of January, as they fight for market share ahead of the reshuffling of container shipping alliances in February.
Carriers are still offering discounts for the first 2 weeks of January despite healthy capacity utilisation as they gear up for the alliance reshuffle that will take place in February.
Clecat: Rates driven by capacity not service
Maritime rates are not determined by how good a service is but by the crude measure of available supply and customer demand, according to freight forwarders’ association, Clecat. Significant changes to carrier alliances and the services that the major lines are offering will come about in February with the carriers preparing for months for a reshuffle of alliances, or in MSC’s case to operate without an alliance partner. In what is expected to be a test for the Gemini Cooperation lines, Maersk and Hapag-Lloyd, the alliance will operate a hub and spoke system which they say will give over 90% certainty on scheduling.
At the other end of the scale, Maersk is looking to offer a genuine door-to-door service, with their customers effectively sub-contracting their logistics services to the carrier, “They will need to take the worry out of the customer’s logistics business,” explained Hookham. That will require the type of soft skills that is simply not a part of the container shipping tradition. “They won’t be able to say, ‘oh there’s a US East Coast strike sorry your cargo is delayed’, customers will want to know what they are offering as a workaround, they want solutions,” claimed Hookham, adding, “Shippers don’t see shipping lines, they see 3PL’s.”
Shippers claim major box lines 'acted together' to profit from the pandemic
Global container lines may be facing fines, and compensation payments of more than $75m, after the filing of two claims at the US Federal Maritime Commission (FMC). The first, lodged by shipper Euromarket Designs, claims Apex Maritime, China United, CMA CGM, Cosco, Evergreen, HMM, Maersk, MSC, ONE and Wan Hai used “coordinated and/or parallel activity” to keep rates high during the pandemic.
Both filings allege these parallel operations included “assessing increasing premium prices and surcharges” and not meeting contracted minimum quantity commitments, forcing customers onto “the much more lucrative spot market (in which they themselves were participating)”. The shippers also claim the carriers “simultaneously cancelled scheduled voyages under the guise of demand uncertainty”.
US port strike called off as ILA and USMX reach 'tentative' agreement
Shippers can breathe a sigh of relief, the east and Gulf coast port strike slated to start next week looks set to be called off – and freight rates could ease. Last night, despite much speculation to the contrary, the ILA and USMX came to a ‘tentative’ agreement – on all items – on a new six-year master contract.
War, weather and global tension the chief threats to 2025 supply chains
Logistics professionals have their work cut out this year as the highest-listed threats identified in the World Economic Forum’s (WEF) Global Risk Report 2025 augur disruption to supply chains. “Disruption to a systemically important supply chain” is risk number 18 of the top 33 in yesterday’s report, compiled from responses from 900 global risk experts, policymakers and industry leaders surveyed in September and October.
The three risks deemed most-pressing were war, extreme weather events and geoeconomic confrontation, with “diversifying supply chains” listed as one “action for today” that could be done to mitigate them. “For organisations, one of the big lessons taken from the ongoing conflicts is the need for supply chain resilience and diversification,” says the report. “With geopolitical volatility likely to remain high over the next two years, organisational investment in geopolitical risk foresight and risk management is a must.”
Gaza truce talks spur hope for resumption of Red Sea shipping
“A ceasefire with the Houthis is crucial to make the Red Sea navigable again,” commented Punit Oza, a well-known commentator on geopolitics and shipping. “If the Houthis do make a truce, then rates will definitely take a downward dip as the Suez and the Red Sea will be back in business, but that confidence to return may still take weeks,” said Oza, who runs Singapore-based consultancy Maritime NXT.
Peter Sand, chief shipping analyst at Xeneta, a container rates platform, said he was still not optimistic that the ongoing talks in Qatar between the two warring factions would lead to the Houthis reining in their attacks as they remain well supplied from Iran. “I would asses that a ceasefire isn’t enough to reopen the Bab al-Mandeb Strait for safe passage. A long-term safe return would still require a solution to the shoreside problems with the Houthi strongholds in and around Yemen,” Sand told Splash.
Ceasefire, but incentives for Houthi attacks and ship diversions remain
The Economist suggests the Houthis may be making as much as $2.1bn a year from cutting deals for safe passage through the Red Sea, citing expert testimony at November’s UN Security Council. If true, the publication argues, this would give the Houthis a critical incentive to maintain attacks. Hans Tino Hansen, head of Risk Intelligence, told The Loadstar his organisation did not expect Houthi strikes to end with the ceasefire agreement. “We do not believe the ceasefire in itself will reduce the attacks from the Houthis, but if it is successful it is step in the right direction,” he explained. Albrecht Grell, head of OceanScore, highlighted that while a resumption of Red Sea transits would likely be beneficial for shippers, there was little incentive for shipping lines.
Post-peak air cargo decline not as strong as feared
Overall, air cargo demand edged up last week as companies looked to move shipments ahead of week-long factory closures in China and other areas of Asia for the Lunar New Year celebrations. WorldACD figures show that in the week ending 19 January, air cargo demand increased by 8% week on week following a 29% increase the week before. An early Lunar New Year - this year running from 29 January - means the seasonal post-Christmas lull in demand has been curtailed. WorldACD said that worldwide tonnages in week three were back up to around 90% of their levels in the last full week before Christmas. Demand out of the Asia Pacific region was up 5% week on week in week three and is 5% above the year-ago level. However, while demand has increased, average global rates remained more or less stable at $2.43 per kg in week three but are around 7% higher than a year ago.
Air cargo: yields and friction up, but demand slowing, as trade 'rebalances'
Air cargo growth will likely slow this year, but those players that can adapt and help customers navigate the “friction and rebalancing of trade” will win out, according to McKinsey. Senior partner Ludwig Hausmann, in a ‘state of the industry’ presentation at the World Cargo Summit in Bruges today, noted “tons of friction, changes, tariffs and a rebalancing of trade” this year. He also revealed that there were clues which indicated that 2025 would likely see a decrease in tonnage growth rates. One of the main drivers of demand, Dr Hausmann explained, was inventory levels: if inventory grows faster than sales, then shippers are unlikely to restock or import.
Airfreight sector left 'exposed' after ecommerce traffic 'falls off a cliff'
The unexpected drop in ecommerce traffic has exposed the airfreight market’s “dependency” on this single vertical.
Forwarders told The Loadstar that since the pandemic, the sector had been “geared around ecommerce, with other shippers’ volumes having been down massively for ages; so when ecommerce drops, it has a huge impact”.
One said “ecommerce volumes had fallen off a cliff” since the start of the year, after previously supporting rates out of China.
SGL predicts a bumpy year for air cargo
The airfreight market is facing a bumpy ride in 2025 as geopolitical developments are set to take their toll on the market but e-commerce and lower inflation are likely to support growth, according to Denmark-based freight forwarder Scan Global Logistics (SGL). In a market outlook, the forwarder said that volatility within the airfreight market is likely to persist this year but overall the industry is still expected to post volume growth.
Ripples from 2025 CNY 'may still be rocking the boats in summer'
Danish forwarder DSV has warned that ripples from the Chinese New Year (CNY) holiday could be felt into the second half of the year, as the looming alliance reshuffle would exacerbate network disruption and lead to surcharges and blank sailings. This year’s CNY begins on 29 January and runs for two weeks, with most of the country closed for business, which DSV warned would impact capacity to and from the Far East. “The usual consequences include long transit times, flight cancellations and void sailing schedules, all of which has a significant impact on the global freight market for weeks after CNY,” it said. The forwarder added that this year’s CNY would be “even more challenging”, due to the Red Sea crisis and changes to the carrier alliances on 1 February.
Chinese New Year rush and threat of tariffs leaves box ports congested
The Chinese factory rush to get goods out before the new year holiday, and the threat of US import tariffs, have seen global container port congestion hit a three-month high. Approximately 3.3m teu, or nearly 11% of the container shipping fleet, is held up at ports in Asia, Europe and North America, according to a Linerlytica report today. The consultancy said: “Chinese ports are extremely congested in the run-up to the holidays, with both the Yangtze River ports and Pearl River Delta ports recording a significant surge in gate and berth congestion. The pre-holiday cargo rush has been exacerbated by heavy demand to beat potential US tariffs for Chinese imports, with carriers also scrambling to build cargo roll pools ahead of the holiday lull.” Linerlytica said the congestion in China would disrupt the transition to the new container shipping alliances on 1 February, giving breathing space to mainline operators that are bracing for under-utilisation after Chinese New Year, which starts tomorrow.
DP World, NSW Ports invest US$250 million to boost Botany's rail capacity
DP World and NSW Ports are jointly investing US$250 million to expand the rail terminal at Port Botany in Sydney, enhancing its logistics capabilities and solidifying the city's role as a key hub for international trade. NSW Ports is contributing US$92 million to the new facility project that will serve both the Container Terminal and the Logistics Park, a prime example of the global trend of placing major logistics hubs near key ports. The project, set to begin in June and complete in two years, will include five new rail sidings designed to accommodate 600-meter-long regional trains.
This investment is part of DP World's ongoing efforts to strengthen its rail infrastructure globally, extending its reach in the supply chain. A key benefit of the project is the increased capacity with the annual rail capacity for DP World's terminal more than double, from 400,000 TEUS to 1 million TEUs.
Access ZG (access-zg.com) provides services to international logistics & trade participants, specialising in connecting with Asian markets.
Thanks for taking the time to read and hope you gained some valuable insights,
Jeffrey Levy CA
Founder
ACCESS ZG
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