Increased demand, high congestion at ports and route disruptions all had an impact on ocean freight charges in 2024. As we move into 2025, there is a degree of uncertainty regarding what will happen with Ocean Freight rates in the first quarter, though they are largely going to be influenced by the upcoming events outlined below.
Chinese New Year
Unlike in previous years, we do not expect to see significant price rises as we approach Chinese New Year. As a result of the Red Sea diversion increasing transit times, we suspect more cargo has moved in Q4 2024 than originally anticipated. As such, the demand for space and equipment in January is lower than you would normally see. Factories are closing down earlier and we expect demand will decline as January goes on.
However, the situation may change on the other side of Chinese New Year. Ocean Carriers will be closely monitoring the situation and may pull vessels from their intended port calls or schedules to meet demand. After all, it is not in their interests to have a carrying capacity of more than 20,000 TEUs calling ports frequently if the vessel will not be fully utilised.
Chinese New Year will close local operations from 28th January until 5th February.
New Carrier Alliances
The termination of the 2M alliance between Maersk and MSC will come into effect as of January 2025. This change, alongside the entrance of new operational partnerships into the ocean freight market, is likely to drive rate increases.
There’s currently great uncertainty about how capacity will be managed and affected with these new alliances. Route changes and reprioritisations are likely to affect scheduling and availability alongside freight rates.
MSC
This shipping liner has decided to go it alone and offer a huge number of direct port-to-port services. In particular, its network of 1,900 direct port pairs will give access to and from Asia (Asia-Europe, Asia-Mediterranean and Asia-North America lanes). This will be supported by a slot sharing agreement with Premier Alliance from the Far East and a three-year partnership with ZIM for six Transpacific services.
Premier Alliance (ONE, Yang Ming and Hyundai)
Effective from February 2025, this alliance will be in place for five years. It will offer mainline services across Asia-Europe, Transpacific and Asia-Middle East trade lanes. The addition of the MSC agreement will mean the alliance can offer greater direct port coverage and more frequent crossings.
Gemini Cooperation (Maersk and Hapag Lloyd)
Another alliance that will become operational in February 2025, the Gemini Cooperation will offer 57 services (including mainliner, feeder and dedicated shuttles) across seven trades and 87 unique ports. It also continues to lead the industry’s schedule reliability with a target of more than 90%. However, it recently announced the cooperation’s ships will no longer be calling Felixstowe Port. Instead, London Gateway Port will be their UK call.
Ocean Alliance (CMA CGM, OOCL, Cosco and Evergreen)
Having extended its agreement to March 2032, the Ocean Alliance will continue to focus on Asia-North American and Transpacific trades. With a historical reputation for fast transit times between the Far East and the UK, the alliance will continue to operate this route.
Three Transatlantic services will be operated with ONE. With extensive port coverage and competitive sailing frequencies, the Ocean Alliance also aims to have more than 120 vessels running on green fuel by 2027. The alliance’s ships will continue to pass through the Port of Felixstowe.
How to navigate the new carrier alliances
It may seem that new carrier alliances are making the ocean freight landscape more complicated. However, if leveraged to suit your business’s needs, they can bring huge benefits. New deliveries mean more capacity is available across routes. Plus, you don’t have to rely on one carrier or alliance for a particular service, but can choose the best option for your supply chain. You just need to plan in advance to secure space and avoid delays.
By working with a trusted freight forwarder like Hemisphere, you can take advantage of these changes with a fully diversified strategy using multiple carriers. We’ll plan ahead to find the carrier or alliance with the best route and prices for each shipment. For example, if your cargo is time-sensitive, we would look at using the Gemini Alliance due to their target of >90% on-time service reliability. Or, we could consider the Ocean Alliance, which typically offers the quickest ocean transits.
With the Red Sea diversion still in place, we can also look for faster alternatives to ocean shipping if needed, such as using the ever-expanding rail and road network from China to the United Kingdom. By carrying significant volume, we can find the most cost-effective options. Plus, we’ll manage the whole booking process and coordinate shipments, using our vast network of global partners.
Our Compass tracking tool gives customers complete visibility over their shipments. Also, unlike carrier alliances, we have dedicated UK customer services which you can get in touch with to discuss your requirements or shipments, even when they’re on the water. In short, by using Hemisphere as your freight forwarder, you can get the most efficient shipment options tailored to your individual requirements
Hemisphere Freight Services are always on hand to discuss your supply chain needs, so please do not hesitate to contact our helpful team should you need any support.
