2025 Ocean Freight Outlook: Trends, Challenges & Insights

What does 2025 hold in store for ocean freight? The answer to that question starts with a look back at the factors that impacted the market this year, combined with the underlying freight data from the past few years.

And depending on how those play out in 2025 we can sketch worst case and best case scenarios for the coming year, as well as what may be the most likely path the market takes in 2025.

You can check our recent 2025 Ocean and Air Outlook webinar here.

2024 – A(nother) volatile year for supply chains  

The Red Sea crisis started at the end of 2023 and continued throughout 2024 impacting operations, freight rates and seasonal demand. Diversions around the Cape of Good Hope meant additional lead times of one to two weeks for Asia – Europe and Mediterranean shippers, and the capacity absorbed by longer journeys and additional vessels – as well as bouts of significant schedule disruptions and congestion at some Asian and European hubs – on these lanes pushed rates up across the container market. 

Ex-Asia container rates tripled from December to January/February – up to nearly $5,000/FEU to the US West Coast and $5,500/FEU to Europe – as the start of the crisis coincided with the seasonal demand increase ahead of Lunar New Year. When demand eased in the spring these rates settled around $3,000/FEU, about double typical levels, as diversions continued to keep capacity constrained. 

The Peak Season Impact

And with lead times likewise extended, peak season started and ended earlier than usual, pushing rates past the $8,000/FEU mark in July. For transpacific shippers, peak season was also pulled forward by shippers rushing to receive goods before an expected October ILA port worker strike, which ended after three days with both a new wage agreement and a January 15th deadline to resolve the role of port automation or face another strike.

Tariff Expectations

The new strike deadline and a Trump victory in November meant stronger than expected Q4 US ocean imports – and container rates – as shippers once again frontloaded ahead of a possible strike and now also ahead of expected tariff increases during the second Trump Administration.  

And for Asia – Europe shippers, rates started climbing again in November – much earlier than usual for pre-LNY demand – as importers must ensure they move all the inventory they need out of China before the holiday or risk a much longer than usual wait to receive goods after LNY due to continued Red Sea diversions. 

The Bottom Line

All of these factors – Red Sea diversions, potential labor disruptions, and tariff threats – remain in play for 2025, with the potential for overcapacity in the market once Red Sea traffic resumes another wrinkle in the story.

So what will 2025 look like? Three Potential Outcomes

Worst Case

Including: Continued Red Sea attacks, labor strikes, and increased tariffs.

If attacks on Red Sea traffic persist throughout the year, we should expect shippers – especially Asia – Europe – to continue to move freight earlier than usual impacting the timing of seasonal demand. And though lessons learned this year could mean lower levels of congestion and schedule disruptions, we should still expect freight rates to look very similar to those of 2024 as long as diversions continue. 

For transpacific shippers, a prolonged East Coast and Gulf port labor strike in January would cause additional congestion and backlogs, and possibly diversions to the West Coast that would put additional pressure on freight rates from their already elevated starting point. 

Transpacific ocean rates have been elevated throughout the year due to Red Sea diversions, but frontloading ahead of expected tariffs is already putting additional pressure on rates as 2025 approaches. 

If President Trump persists in tariff threats, and if he follows through on his stated intentions – 60% tariffs on Chinese imports, a universal 10% – 20% on all imports and 25% on goods from Canada and Mexico – then freight rates will face additional pressure up until expectations change or tariffs go into effect. 

Frontloading ahead of tariffs will mean higher ocean demand and rates ahead of the tariffs and lower volumes and rates afterwards. Typical seasonality could therefore be skewed as shippers make decisions based on when tariffs will go into effect and not on inventory needs around seasonal goods/spending patterns. 

And a sharp increase in demand – if there proves to be only a small window before tariffs go into effect – could also lead to some congestion that would likewise put upward pressure on rates. Tariff increases could also mean some shift in container volumes away from China and toward alternatives like Vietnam and India. 

Best Case

Variables: End to Red Sea crisis, labor strikes averted and tariffs emerge as primarily a negotiating tactic

If the ILA strike is averted or brief – which may be increasingly likely given President-elect Trump’s recent support for the union – transpacific and transatlantic shippers will avoid a potential source of significant disruption and possible rate spikes. 

And if Trump’s tariff threats turn out to be more negotiating tools than policy early enough in the year, then the end to frontloading ahead of tariff hikes would restore typical seasonality to these markets, avoid additional container rate spikes, and provide a degree of certainty to the many trade lanes and businesses that would’ve been impacted by tariff changes.

Finally, an end to attacks in the Red Sea in 2025 would restore container traffic to this crucial lane.  An adjustment period, possibly of several months, will follow and will include schedule disruptions, congestion and delays as services are reshuffled and reset. But afterwards, all the capacity that had been absorbed by the diversions will be released back into the market, restoring typical transit times and container flows, removing a key source of congestion and delays in 2024 and relieving pressure on freight rates.

An end to Red Sea diversions would certainly – after the adjustment period – let rates come down from the elevated levels seen in 2024, but the growing container fleet could also push the market into a state of significant over capacity. This may be considered a best case for some shippers in that this supply surge could lead to extremely low rates like those seen in late 2023 when prices dipped below $1k/FEU on some ex-Asia lanes. 

Most likely: Somewhere in Between

Labor Strikes

Though of course not a certainty, incoming President Trump’s explicit support for the ILA, may make a strike – or at least a prolonged one – less likely than before this announcement.  The USMX could of course resist, but after conceding in October to probably less government pressure than they could face in January, it may be more likely that the dispute will end before or soon after the 15th and probably more in the ILA’s favor.   

Tariffs

Some US tariff increases will almost certainly go into effect at some point in 2025, though the process required for tariff changes will mean they likely won’t happen on January 20th but a month or two later at the earliest. They’ll probably also not take the exact form proposed by Trump until now as he’s already facing domestic and international opposition to these sweeping changes. 

But assuming tariff increases will be announced with a runway of several months before they’re introduced – which was the case in 2018 (see our analysis of the impact of those tariff increases here and here) – we’ll likely see container demand skew to before their roll out with rates under more upward pressure in that period too.

Red Sea and capacity levels

In terms of the Red Sea, the Israel – Hamas war is the Houthi’s stated motivation for attacking passing vessels. And though some observers speculate that even once there is a Gaza ceasefire Houthi attacks could continue anyway, it is possible that diversions will end once the war ends. And developments in the region make an end to the war this year more likely than it was in 2024. 

As noted above, restored Red Sea traffic will trigger a bumpy adjustment period, after which rates will decrease significantly from their elevated levels in 2024. And though significant overcapacity is possible, in a recent earnings call Maersk speculated that a sharp increase in vessel scrapping, offloading chartered vessels, slow steaming and effective use of blanked sailings will allow carriers to avoid a complete rate collapse even after the Red Sea crisis ends.

And despite the flurry of new vessel deliveries and fears of overcapacity, the orderbook continues to be strong, with a high level of new orders throughout this year, suggesting carriers are confident that the fleet can continue to grow without causing a rate collapse. 

So rates will certainly normalize once Red Sea traffic resumes. If that coincides with a drop in demand because tariffs led to a significant pull forward earlier in the year, then it will be even more challenging for carriers to avoid loss-making rate levels. Some increased competition as the new alliances are introduced early in the year could also put extra downward pressure on rates. But it will remain to be seen when the Red Sea will reopen, and what that will mean for capacity levels and rates as a result. 

So, yet again, it seems the ocean container market must start the new year with high levels of uncertainty as to what the near future holds.