Sea-freight Review 2024

As we approach the end of 2024, perhaps now would be a good time to look back and review the sea freight market. It would also be prudent to look ahead to 2025 and what could be instore in which promises to be another turbulent year.

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Summary of Sea-freight market 2024

Red Sea Crises

The biggest and most disruptive event has to be the Red Sea Crises which started back in December 2023. The has resulted in the vast majority of shipping lines diverting vessels around the Cape of Good Hope.

Impacts of the Red Sea Crises

???? Increased costs – fuel usage has increased by an approximate 40%

?????????????? Longer Transit times – journeys are taking approximately 14 days longer.

Container and equipment shortages – equipment is tied up on vessels and repositioning is not as effective

Capacity reductions – an estimated loss of 15-20% of capacity due to the longer transit times and deployment of vessels

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Other Challenges

Port Strikes in US and Canada

US East Coast and Gulf Port Strikes were averted but have a deadline of the 15th January. So pending strikes could be a factor in Q1 2025

Canada port strikes in Prince Rupert Vancouver and Montreal impacting 40% of the ports capacity

Continued unrest – Middle East, Ukraine War and tensions in the South China Sea.

US Election – importers in the US increased volumes from Q3 with pending Election and tariffs being introduced by Trump.? US rates remained high during 2024.

Overall rates in 2024 were over 50% higher than in 2023.

Expectations in 2025

Trump Effect – applying across the board tariffs of 10% to 20% on most of the $3 trillion worth of annual US imports, and a minimum 60% tariff on all imports from China.

Its anticipated US Imports will spike as shippers rush to bring in more goods before there are any further tariff increases. This was evident back in 2018 when Trump first got into office, both rates and volumes doubled between July and November 2018.

Why would this affect the UK market ? ?

Repositioning of equipment to the US trade lanes.

Shortage and imbalance of equipment

Port congestion at loading ports.

Anticipated higher freight rates

Other considerations for 2025

Ongoing disruption in the Middle East.

Continued rising overheads and labour costs

New Shipping Alliances from February 2025 made lead to some initial disruption whilst carriers come to terms with it.

Higher Fuel and Oil prices due to IMO and cutting emissions

Scrappage of older fleet.

Potential escalation of tension in the South China Sea over ownership of the Spratly Islands.

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Will the Red Sea crises end and vessels transit back through the Suez Canal. Will peace in Gaza put to end the action from Houthi rebels?

Many think that once the Red Sea crises ends, overcapacity in the market will push the rates down, possibly to extreme lows.

However, services would take at least 3 months to get back to normal and if vessels pass through the canal again it could lead to bottlenecks and port congestion in Europe. Also the new alliances will take time to run smoothly after their launch in February, expected demand in growth, slow streaming and the scrapping of older vessels all could impact capacity and keep the rates profitable for carriers.

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Summary

2025 remains to be an turbulent year and we anticipate that rates will remain high for 2025. Equipment shortages, port congestion and route diversions will continue to limit capacity and keep the rates higher than pre-pandemic levels.