The Merchant · n°131 · January 23, 2025

Houthi pledge overturns shipping market forecasts

🚢 Back to the Red Sea? Easy now
📉 Winter chill on rates
✈️ Air freight rates soar

Figure of the week

1,000 billion In dollars, this is the trade surplus China posted in 2024. The gap between the value of exports and imports is three times larger than in 2018, according to the Wall Street Journal. China’s dominance over global manufacturing is greater than ever.

Quote of the week

“In 2025, consolidation in the transport and logistics sector will continue. And this will pose fundamental challenges for the smallest shippers.” The latest prediction from Arthur Barillas, CEO of OVRSEA, for the year ahead. Throughout January, find his analyses for 2025 on his LinkedIn account.

Easy now. Why a return via the Red Sea could take months

On Sunday, the ceasefire in Gaza between Israel and Hamas came into force, for an initial phase of 42 days. While the agreement appears to be holding, the situation remains as fragile and explosive as ever in Gaza and across the region.

The silence of the guns has of course revived hopes of ships returning to the Red Sea and the Suez Canal. Yemen’s Houthis have opened the door to such a prospect, announcing a pause in their attacks on vessels not linked to Israel. But they warned that attacks would resume “in the event of aggression against the Republic of Yemen by the United States, the United Kingdom or (Israel)”.

For now, carriers remain very cautious and no resumption of the Red Sea route has been announced. “We (…) will transit Bab al-Mandeb as soon as we can do so safely,” Maersk said. “It is still too early to speculate on the timeline.” A wait-and-see attitude. Reuters also recalled that, for marine insurers, the risks were still too high.

No one is going to rush, then, especially since the reopening of the fast link between Asia and Europe will have gigantic operational and rate repercussions. Reminder: nearly 10% of total capacity has been absorbed by the diversion around the south of Africa since the start of the crisis. In the reverse direction, temporary “chaos” (Xeneta) would await us: disruption of flows, delayed port congestion and a sharp fall in rates (which is good news in itself for shippers). Fortunately, it seems carriers have anticipated the move. It is likely that the return to the Red Sea will happen gradually, alongside the scrapping of the oldest container ships or the slowing of sailing speeds. In any case, it will take nearly 2 months before an overall balance is restored.

Ocean freight in the midst of a winter slowdown

With the exception of the Transatlantic Europe > United States, spot rates on the major trades are all trending downward. With Chinese New Year approaching, this should continue until at least mid-February. On the Asia-North Europe axis, the SCFI (Shanghai Containerized Freight Index) lost 6% last week and Linerlytica estimates that contract rates should fall sharply in the coming days and weeks, following the announcement of the Gaza ceasefire.

By mid-February, the post-CNY rebound in activity in China could nonetheless give ocean freight a bit of a boost, but uncertainty is high. The introduction of the new Gemini Cooperation and Premier Alliance alliances on February 1, coupled with Trump’s likely tariff announcements, cloud the picture and the forecasts. At his inauguration, the 47th US president mentioned only Mexico and Canada, on which he wants to impose an additional 25% in customs duties starting February 1. As for the rest, suspense.

Despite this context, some players are trying to stay positive. “I am quietly optimistic for the year, having analyzed both our short-term bookings and our committed volumes,” said Henrik Schilling, an executive at Hapag-Lloyd. The German carrier also confirms its target of reaching 90% schedule reliability as part of its Gemini alliance with Maersk.

Air freight: spot rates far (above) their early-2024 level

While the approach of CNY prompted a brief rebound in air imports from Asia, the overall trend is, as in ocean freight, toward a cooling market. E-commerce activity appears to be sharply down compared with December, which can be explained by seasonal factors and high inventory levels in the West.

According to WorldACD, global spot rates fell by 3% last week, but make no mistake: they remain at very high levels for the season.

From the Asia-Pacific region, the average spot rate is thus 27% higher than a year ago. On the Asia-Europe trade in particular, despite a marked drop in activity since the end of 2024 (-40% in terms of volume), rates exceed their January 2024 level by 42%. The same underlying trend applies from South Korea or Japan. Between the Middle East and Europe, rates are here down about 20% since November, but still up 65% year on year. Also worth noting, since the announcement of the Gaza ceasefire, a beginning of a return of European carriers on certain routes with Israel.

On the supply side, all lights are green. Rotate notes that overall bellyhold capacity has returned to its pre-pandemic level.

👋 See you next week, The Merchant team

Sources

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