The Merchant · n°139 · March 20, 2025

Fresh clashes dampen hopes of Red Sea return...

🚢 Toward a rebound in rates?
⚓ End of the strike in France.
✈️ Air freight caught in the customs storm.

Figure of the week

37.8% This is the percentage of vessels in circulation that were built in China, according to Alphaliner. All are threatened by the increase in port calls announced by the Office of the United States Trade Representative.

Quote of the week

“Every shot fired by the Houthis will now be looked upon, from this point forward, as being a shot fired from the weapons and leadership of IRAN.” Donald Trump on his Truth Social network, Monday, March 17, as the crisis in the Red Sea worsens.

A rebound in rates in sight?

The post-Chinese New Year recovery took so long to take shape that we were beginning to run out of adjectives to describe the situation. But after a gloomy February and a lackluster start to March, a rebound would appear to be in sight. According to CMA CGM, bookings are accelerating, with vessels now approaching fill rates of 100%. Compared with the same period in 2024, this recovery remains timid! Proportionally, we are still far from the fill levels of last summer. The gap is all the more significant to close given that rates on the Asia-Europe route had fallen below last year’s lowest levels.

Rates are also supported by the geopolitical crisis as the situation in the Red Sea continues to deteriorate. Since this weekend, the United States has launched a campaign of airstrikes against Yemen. On Tuesday morning, Israel also launched an offensive on the Gaza Strip, effectively ending the ceasefire agreement. Finally, the Trump administration is directly threatening Iran, fueling fears of a regional flare-up.

For Lars Jensen, founder of Vespucci Maritime, this new episode of the Red Sea crisis heralds “a supply/demand balance that is still solid, though less vigorous than during the 2024 high season, due to the continued deliveries of tonnage - provided that demand growth holds up.” In this context, shipping companies have announced new General Rate Increases (GRI) effective April 1. Unlike the GRIs planned for March, these could be maintained by the economic and geopolitical situation.

Calm in French ports

Good news in a difficult context for European ports! While the Old Continent is facing enormous port congestion problems, French dockers have decided to suspend their strike movement until March 25. The 72-hour walkout planned for March 18-20 will therefore not take place. The suspension follows a meeting between representatives of the ministries concerned, employers, and unions to find a way out of the conflict on March 14. Despite this announcement, dockers are still demanding that the government’s promises be honored, such as an exemption from pension reform for port workers and better recognition of the hardship of their profession.

Since November 2023, dockers have accumulated nearly 120 days of strikes (about 300 hours of disruption), which has already generated substantial additional costs, notably a bill estimated at 232 million euros for the month of February alone. Added to this were extra costs linked to logistical disorganization and the rerouting of traffic to other European ports. In the immediate term, the cancellation of three full days of strikes has freed up many appointments. For Hugo de Bengy, Head of Operations at OVRSEA, Le Havre remains a top option for export. Activity should return to normal by the end of the week - or the beginning of the next. For import, it is advised to favor arrivals at Dunkirk, Antwerp, or Zeebrugge, if the additional cost is negligible.

This last indication is indeed a sign that the strike suspension should be taken with caution. Given the demands displayed by the CGT, a resumption of the conflict remains a conceivable scenario in the coming weeks.

A crash on the way for air freight?

The customs war opened by the Trump administration is disrupting the air sector. After a 2024 marked by double-digit growth, freight growth slowed to 3% over the January-February period, against forecasts of 5%. The rush of customs measures translates into notable declines in export volumes: China is showing a 10% drop in shipments to the United States. Figures from U.S. Customs and Border Protection (CBP) underscore the seriousness of the situation: in February, revenue from audits fell 90% compared with the previous month, while the number of entries processed decreased by only 7%. These imbalances, inseparable from the planned end of the “de minimis” regime, reinforce operators’ uncertainties while curbing investment. At the same time, volumes between Asia and Europe are rising, a sign that some players are beginning to bypass the United States.

But China is not the only party to this customs conflict. By targeting allies such as Canada and the European Union, which are strongly integrated into the American economy, the Trump administration is taking significant risks. Industry players are sounding the alarm. Niall van de Wouw, head of air freight at Xeneta, warns, saying that if e-commerce continued to be affected, “it would have a profound effect on air freight rates worldwide.” Moreover, this policy is beginning to alienate some of Donald Trump’s supporters - at a time when JP Morgan has announced that the risks of a recession for 2025 had doubled since last November.

Will air freight be able to take flight again?

👋 See you next week, The Merchant team

Sources

← The Merchant Subscribe to The Merchant