Carriers refuse to play the role of Christmas turkeys

Figure of the week

$180 million

The amount collected monthly by the Houthis from ships passing through the Red Sea and Gulf of Aden in exchange for not being attacked. Arab News said the figures came from a UN report, which does not appear to have been widely released.

Quote of the week

“Businesses are pouring into the us only because of tariffs. Has the United States Supreme Court not been told this? What the hell is going on???” President Donald Trump responds to signals that the Supreme Court may be preparing to rule against his tariff policy.

Carriers refuse to play the role of Christmas turkeys

The Houthis have announced an official end to attacks on Israel-linked vessels in the Red Sea, but ocean carriers are unsurprisingly cool on the prospect of a Suez Canal return . A Houthis spokesman said that as long as the Israel–Hamas ceasefire in Gaza holds up, the group will pause attacks on Israel and commercial shipping. The development raises questions about the potential return of container trade to the Red Sea and Suez Canal. Several barriers, however, remain before that can happen. The most significant is the fragility of the ceasefire. If Israel and Hamas were to suddenly resume widespread hostilities, any carrier that had rerouted through the Red Sea would find itself forced to make hasty alternative arrangements. Maersk CEO Vincent Clerc said that he was encouraged by the ceasefire, but he would need to ensure that it had “become entrenched and doesn’t risk going backward at some point.” Currently, the only major carrier operating via the Red Sea is CMA CGM. The French company said it was not planning to deploy larger ships through the Suez Canal. In response to the news, shipping consultant Lars Jensen wrote: “Based on the developments earlier this year, it appears premature to interpret the Houthi ceasefire as a sign of an imminent return by the shipping lines.” Xeneta chief analyst Peter Sand said: “You cannot base the safety of crews, ships and cargo on the word of the Houthi militia. Carriers need far more assurance than that.” So, added Sand, pointedly, do insurance companies. However, with overcapacity on the market bearing a heavy part of the responsibility for sinking rates, it is hard to see why ocean carriers would welcome a development that would free up yet more capacity. Rates are expected to weaken throughout the remainder of 2025. If carriers were to rush to return to Red Sea routings, it would effectively give shippers an early seasonal gift in the form of lower rates. But in the current circumstances, for carriers themselves to seek a prompt Suez Canal and Red Sea return would be like turkeys voting for Christmas .

Shutdown underlines air freight risk

US air freight shippers have dodged a bullet after the federal government shutdown was lifted . Analysts were predicting that any affected schedules would be returning to normal this weekend, after feuding US political parties ended the longest-ever government shutdown. Judah Levine, head of research at Freightos, said cargo had largely been spared the essential effects of the funding shutdown. “The shutdown lasted over 40 days and led to a shortage of air traffic controllers, and therefore a planned phase-in of a 10% reduction in flights, which only got up to about 6%,” he said. “It’s been disrupting domestic passenger travel. (But) the belly-hold cargo that goes along with domestic freighters and international flights, which account for the bulk of the US air cargo market, was spared.” Had the shutdown continued any longer, it was expected that the effects on air freight would have rapidly started to multiply. The US air cargo market is also dealing with the effects on capacity of the FAA grounding of the country’s entire fleet of MD-11s. Around 50 aircraft will be grounded until they can be inspected as a result of the fatal crash of a freighter in Kentucky. Events like these underline how analysts have been warning of increased volatility potentially affecting air freight markets at short notice. Currently, stabilizing demand means rates and capacity remain tight from China to the US. This is largely a result of airlines shifting capacity to intra-Asia and Asia–Europe routes. Those routes have proved more enticing to airlines in the wake of the US de minimis crackdown. As a result, US shippers need to act quickly in order to secure the best rates and space .

Why US and Europe rates are taking opposing paths

Container freight rates out of Asia to the US continued to weaken this week, in marked contrast to Europe-bound rates . Ocean carriers appear to be powerless to prop up the Transpacific market for more than a few days at a time. The Shanghai to Los Angeles leg declined 12% week on week, according to WCI figures. Meanwhile the Shanghai to New York leg was down 15%. Industry insiders are expecting container rates to continue to fall throughout 2025. Carriers are expected to try further GRIs in December, but with the market remaining tepid, there is little prospect of success for any rate increases. Xeneta chief analyst Peter Sand said market sentiment was playing a powerful role in container rates. This was particularly true of rates to the US West Coast, he said. This explains why the US–China trade deal and suspension of port fees between the two countries has held up West Coast rates better than East Coast rates. “Taking a wider view, container shipping offered capacity is increasing on all front-haul trades, and this will have an impact on rates, with carriers likely having less success with GRIs than they did in October and early November,” said Sand. Shippers can look forward to a much more favorable and predictable end to 2025 compared to the start of the year.

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Jamieson Greer, the US trade representative, said the EU duties on US goods remained too high despite the tariff deal struck earlier this year. “We did not solve every problem in our relationship with our joint statement from earlier in the year. Trade has always been a flashpoint. (The EU has) many regulations and non-tariff barriers that block our exports and reduce our effective market access over there, while we historically have had very broad access for them,” said Greer.

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