Sea liners plan to increase prices by 36% for long-term European contracts in 2025
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With the opening of long-term negotiations for container shipping in 2025, European routes, as a pioneer, will enter the intensive negotiation phase between shippers and liners in November. Market news shows that some sea liners plan to increase the freight rate per 40-foot container to US$2,500-3,000, an increase of 25%-36% compared with last year.
In order to create a favorable negotiation environment and increase bargaining chips, many liners have created a shortage of space on the European line recently and plan to increase prices by about $1,500 in November. According to the quotations of the freight forwarding industry, the current spot market freight rate is about $3,400 to $3,700, which means that the liners' price increase plan will be close to a 50% increase. Industry experts pointed out that sea liners are trying to push up the negotiation price of long-term contracts by widening the gap between spot prices and long-term contract prices.
On the 25th Oct, the Shanghai Containerized Freight Index (SCFI) ended its eight-week decline and turned to rise, mainly driven by a 10% increase in freight rates on European and Mediterranean routes. This change is seen as partly reflecting the sea liner's price increase plan, but whether the increase can continue remains to be seen.
Recently, shipping giants such as Maersk and Hapag-Lloyd have raised their performance expectations for this year. The main reason is that the attacks in the Red Sea region continue to disrupt the supply chain, leading to an increase in container demand and freight rates. Market rumors say that Maersk, Evergreen and other companies plan to increase prices in the spot market by about 50% in early November, pushing up the freight rate per 40-foot container to US$4,500-4,650.
Industry insiders pointed out that despite the continuous investment of new capacity in the market, sea liners can still reduce capacity supply through technical adjustments to space, such as blank sailing and slow sailing. As space becomes tight, liners adopt a strategy of stopping declines with increases, taking advantage of customers' expectations of rising freight rates, trying to stimulate shipments to stabilize freight rates and increase loading rates.
According to the industry, when the long-term contract for the European route was signed at the end of last year, the liners was unwilling to accept the low price offered by the cargo owner, which led to a deadlock in the negotiations. However, the attack on merchant ships in the Red Sea in November led to an increase in freight rates, and the liners once suspended negotiations.
With last year's experience and the continued tension in the Red Sea, most sea liners plan to continue to sail around the Cape of Good Hope on the European route, which will extend the voyage time and increase operating costs. Therefore, the goods need to be shipped in advance. These factors will help the shipping situation continue in 2025, and the industry expects that most long-term contracts this year will be confirmed before the New Year.