5 Ocean Freight Predictions for 2025

Looking ahead to 2025, the global ocean freight market shows no signs of slowing down. From ongoing disruptions in the Red Sea and the Panama Canal, to broader geopolitical tensions and shifting global trade patterns, shippers face more complexities than ever.

New potential U.S. tariffs on Chinese goods could drive up freight rates; businesses continue to diversify their suppliers, shifting from China and other Asian countries to Mexico; and the possibility of more port strikes may disrupt the U.S. East and Gulf Coasts in January.

Here are five predictions for how the ocean freight industry will play out in 2025.

Supply and demand dynamics continue to evolve

In 2025, supply and demand dynamics in ocean shipping are set to remain complex, with evolving trends and unpredictable fluctuations shaping the market.

The big picture of supply and demand is a cautiously optimistic prediction: supply and demand remain relatively equal heading into 2025, despite longer lead times and supply pressures caused by Cape of Good Hope (COGH) diversions. Without much additional capacity, the market would likely see more volatility across rate levels and space availability in the event of any large, unexpected disruptions. However, the market is expecting an 8% increase in capacity in 2025 and only a 3% increase in demand, which will help ease volatility. “Effective space”—the usable capacity of a ship—generally trends higher than anticipated demand levels except at the peaks, so shippers should continue to expect rates to increase during peak times.

Volatile rate levels and space availability have been key topics in 2024, and are expected to continue on key routes like Asia to Europe and Asia to the United States. Meanwhile, other trade lanes, such as those from Europe to the United States and Europe to Asia have remained relatively stable—a trend that’s expected to continue.

Flexport

But when it comes to navigating fixed-rate contracts, both carriers and freight forwarders have moved quickly to adapt to more uncertainty. For example, the traditional rate differential of $1,000-1,200 between Trans-Pacific imports to the East and West Coasts has become unreliable. Rates can fluctuate wildly, and currently, routing to the East Coast is nearly as affordable as routing to the West Coast, though this may change if an International Longshoremen’s Association (ILA) strike occurs on the East Coast around Jan. 15, 2025.

In 2024, blank sailings remained high (at 15-20%), making operational reliability a key issue for many shippers. This year, many of these blank sailings were related to vessels not being available in time to meet their schedule, further complicating the situation and adding to the volatility. Blank sailings in a “normal” environment are used as a tool to manage supply at times of low demand. But for most of 2024, blank sailings were driven by a lack of vessels. This has resulted in more extreme volatility, as carriers have experienced reduced capacity during peak season.

Ongoing disruptions add uncertainty and longer transit time

The Suez Canal diversions and an early peak season are setting the stage for a turbulent 2025 in ocean shipping, with ongoing disruptions and planning challenges shaping the year ahead. Many lingering issues in 2024 show few signs of letting up in the New Year: for example, the Suez Canal, which normally handles 12% of global trade, is not expected to resume normal operations in 2025.

Even though some niche regional carriers have used the canal, many carriers across the broader industry are still diverting vessels around the COGH. Shippers should understand how they are insured, particularly against General Average events, in case they’re shipping on a service transiting Suez: the premium—or lack of coverage—might not be worth the shorter sailing time.

With an additional two weeks of lead time required for shipments diverting around the COGH, many shippers and importers have started planning their shipments earlier. This shift has resulted in an earlier peak season than usual this year. This trend—planning shipments ahead of schedule—is expected to continue through the Lunar New Year in late January 2025.

Additionally, tensions between the ILA and the U.S. Maritime Alliance (USMX) remain unresolved. Both parties have agreed to work toward a resolution by the Jan. 15 deadline, at which point a new master contract must be established to prevent another strike.

New shipping alliances bring major tactical challenges

New shipping alliances set to launch in early 2025 are poised to bring tactical challenges for shippers, with February and March likely marked by short-term chaos as the market adjusts to shifting capacities and service structures.

Gemini will leverage a hub-and-spoke model, where large ships bring cargo to primary hubs and smaller ships carry goods from those hubs to different destinations. In contrast, MSC will focus on direct port pairs—meaning ships will make more frequent stops at ports, and deliver cargo directly to more locations without intermediate hubs. Premier and Ocean Alliance sit in between.

The Ocean Alliance—comprised of CMA CGM, COSCO/OOCL, and Evergreen—is expected to remain stable in 2025, and will extend its partnership through March 2032. The alliance structure and service network will remain largely unchanged, with members collectively operating over 40 unique services. Together, they will contribute just over 4 million TEUs of capacity to the alliance. An additional 4 million TEUs from these carriers will operate outside of the alliance, either as independent services or through vessel-sharing agreements (VSAs) with other carriers.

The Gemini Cooperation, a partnership between Hapag-Lloyd and Maersk, is set to launch in February 2025. This cooperation will bring together 3.7 million TEUs of shared capacity across 26 mainline services and 32 dedicated shuttles, focusing on critical East-West trade lanes, including routes linking Asia to Europe and the Americas. With a network spanning 85 unique ports, Gemini is designed to provide targeted, high-demand route coverage rather than a broad, fully integrated alliance.

Following Hapag-Lloyd's departure, the Premier Alliance now consists of ONE, Yang Ming, and HMM, with a combined fleet capacity of approximately 3.5 million TEUs. An estimated 65% of this capacity will be dedicated to the alliance’s shared services, with the remaining capacity used for independent operations or vessel-sharing agreements with other carriers.

MSC has opted not to join a traditional alliance after exiting the 2M Alliance with Maersk. Instead, MSC has pursued a strategy of selective vessel-sharing agreements and slot exchanges with other carriers, including Premier Alliance members and ZIM, to cover specific trade lanes without the full commitment of an alliance structure.

These vessel sharing agreements (VSAs) allow MSC to benefit from shared capacity and route coverage on select lanes while retaining independence over its larger network. In particular, MSC’s slot exchange with Premier Alliance on the Asia-Europe trade enhances its reach in this region, adding frequency and port coverage in cooperation with Premier’s routes. MSC’s approach enables it to adjust capacity and enter partnerships as needed, providing both flexibility and competitive advantage across specific high-demand markets.

Beneficial Cargo Owners (BCOs) will need to be more selective in 2025 due to an increasingly complex carrier landscape. Historically, BCOs may have focused mainly on transit time and price. However, with diverse network designs, they now need to evaluate other factors, such as risk and suitability to their unique needs.

Smaller shippers, who may not be familiar with these nuances, could find it challenging to choose the right service, and might benefit from closer collaboration with freight forwarders to navigate complexities and minimize risks.

Additionally, shippers should abandon the misconception that a direct service is by definition faster than a transshipment service.

Index-linked deals and enforceable contracts become more popular

Index-linked contracts, which link shipping costs to a well-known shipping index, have gained popularity for being able to provide consistent access to capacity and reduce administration costs.

While an index-linked agreement is not necessarily predictable in terms of what the exact cost will be one month from now, it is predictable in that it will follow the market.

In addition to their predictable market-following feature—that is, their ability to link shipping costs with market price—index-linked contracts save time, as they over time simplify the request for proposal (RFP) process and reduce administration, and help build long-term relationships with carriers and forwarders.

Regulations and tariffs mean shifts in trade patterns

As the world’s largest goods importer, the United States brought in about $3.8 trillion’s worth of goods in 2023, according to data from the U.S. Department of Commerce.

There is a notable shift in sourcing for U.S. imports as markets in Southeast Asia, South Korea, and India begin to grow.

Companies are reducing single sourcing, and they are diversifying now. Why that’s important is, one, consider doing the same if you’re expanding, and two, keep in mind that changing sourcing may completely change how you import today. The location of imports determines which U.S. port you’ll be using.

Recommendations for 2025

• Diversify rate strategy. Don’t rely solely on fully fixed deals. Incorporate some floating index-based agreements and consider the seasonality of your business in planning.
• Diversify carrier and alliance strategy. Consider leveraging new alliances and service networks over the next year to maximize operational quality and flexibility.
• Harness transit time and price-differentiated services. Having goods arrive earlier than your competition can provide a significant advantage. With reliable and accurate transit time predictions, you can streamline the inventory planning process and react quickly to any disruptions.
• Consider less-than-container load options. If you split cargo, you can reduce costs by only moving urgent goods on premium rates. Consolidation is also often a cost saver.
• Stay agile. Regardless of what happens with any carrier or alliance, ensure a plan is in place to navigate challenges and deliver goods on time.
• Pay attention to shifting trade dynamics—sourcing, routing, and the need for multiple gateways.