Global Air and Ocean Freight Outlook for 2025: Insights into Key Asian Trade Lanes

28 Oct Global Air and Ocean Freight Outlook for 2025: Insights into Key Asian Trade Lanes

As global trade dynamics shift amid economic changes and infrastructural developments, stakeholders are keen to understand the future of freight markets. This article provides a concise analysis of the air and ocean freight markets for key Asian trade lanes, offering forecasts for the remainder of 2024 and looking ahead to 2025.

Air Freight Market Analysis

The air freight market is poised for significant changes as we approach the end of 2024 and move into 2025, with notable developments in China and Bangladesh.

China Market Update

Air freight rates from China are expected to peak in early to mid-November 2024, driven by increased demand ahead of the holiday season. These rates are anticipated to decline during the Thanksgiving holiday and into December, making November rates higher on average compared to October.

Post-COVID, airlines have adopted aggressive pricing strategies, leading to consistent annual increases in Block Space Agreement (BSA) rates. This trend is projected to continue into 2025, with an expected average rate increase of 10–15%. Despite these rate hikes, capacity is unlikely to see significant changes due to limitations in commercial flights caused by crew shortages. As a result, air freight capacity is forecasted to remain stable.

The air freight market remains challenging to predict. While general cargo volumes have decreased, e-commerce shipments are on the rise. E-commerce providers often charter their own planes during peak seasons when airline rates surge and negotiate favorable rates during low seasons. This shift means the air freight market is heavily influenced by e-commerce activities.

Furthermore, exports from China to the United States are expected to slow down due to a decrease in purchase orders, influenced by the current economic and political situation between the two countries.

Bangladesh Market Update

Bangladesh is experiencing significant political transformations in 2024, which have substantially impacted its air freight market. These changes have led to increased air freight rates due to market uncertainties and logistical challenges, compounded by disruptions in the Red Sea region.

Pricing Trends

  • November to December 2024: Rates are expected to trend downward as market conditions stabilize. However, fluctuations may occur due to the Christmas holiday season, which typically sees increased demand.
  • First Quarter of 2025: A continued downward trend in rates is anticipated, reflecting potential easing of political and regional disruptions.
  • Second Quarter Onward in 2025: The aviation industry predicts an upward trajectory in air freight rates from Bangladesh, likely driven by increased demand and normalization of economic activities.

Potential Policy Changes

  • U.S. GSP Reinstatement: There is speculation that the United States may reinstate the Generalized System of Preferences (GSP) for Bangladesh in the coming year. If enacted, this policy could boost trade volumes by providing duty-free access for certain goods, positively impacting the air freight market.

General Air Freight Outlook

Capacity and Demand Dynamics

  • Economic Growth: Anticipated global economic recovery is likely to spur increased demand for air freight services from Asia to North America, including from China, Bangladesh, and Cambodia.
  • Capacity Constraints: Limitations such as crew shortages may constrain capacity despite airlines introducing new aircraft with larger cargo capabilities.

Pricing Factors

  • Fuel Costs: Fluctuations in jet fuel prices and the adoption of sustainable aviation fuels may influence freight rates due to changes in operational costs.
  • Operational Expenses: Compliance with environmental regulations may increase costs, potentially affecting pricing structures.

Technological and Regulatory Influences

  • Digitalization: Advancements in technology are improving efficiency through better route optimization and cargo tracking.
  • Environmental Regulations: Stricter emissions standards require airlines to invest in greener technologies, impacting operational strategies.

Challenges

  • Infrastructure Constraints: Airport congestion remains a challenge, necessitating investments in logistics facilities and infrastructure.
  • Labor Shortages: A shortage of skilled aviation personnel may affect operational efficiency, highlighting the need for workforce development.

Impact of Cambodia’s New Airport Runways

The construction of new runways at Cambodia’s airport is expected to enhance cargo handling capabilities, attract more carriers, and boost trade flow. This development may lead to more competitive rates due to increased capacity.


Ocean Freight Market Analysis

The ocean freight market is undergoing transformative changes, with significant implications for pricing and capacity on key Asian trade lanes to North America.

Pricing Expectations for the Remainder of 2024

Rates are projected to stabilize or slightly decrease post-peak season, with minor fluctuations due to bunker fuel price changes.

2025 Forecast

  • Fleet Expansion: The addition of new vessels will increase global shipping capacity. If supply outpaces demand, freight rates may decline due to heightened competition.
  • Environmental Compliance: Costs associated with meeting new emissions standards may affect operational expenses and pricing.

Routing and Geopolitical Considerations

Recent developments have significant implications for ocean freight routes:

  • CMA CGM Fleet Deployment: CMA CGM had planned to officially deploy their fleet through the Suez Canal in March 2025. However, with the current escalation of the crisis in the Middle East, this plan appears increasingly unlikely. The instability in the region poses risks to vessels transiting the Suez Canal.

Labor Strikes and Port Disruptions

Potential labor strikes in 2025 could significantly impact ocean freight operations:

  • Canada Rail Strike: There is a possibility of a rail strike in Canada, as union leaders are currently in discussions with federal courts. A strike could occur closer to the next Canadian federal election, disrupting inland transportation and causing delays in cargo movement across the country.
  • Port of Montreal Strike: A potential strike at the Port of Montreal may lead to congestion and delays, with cargo being diverted to other ports, exacerbating capacity issues elsewhere.
  • U.S. East and Gulf Coast Ports: Labor negotiations are set to resume after the U.S. elections. If talks do not progress positively, a strike could occur in January 2025, affecting major ports and causing ripple effects on the East Coast, including increased pressure on the Port of Halifax.
  • Canadian West Coast Ports: There is also the potential for strikes at Canadian West Coast ports in the upcoming year, which would disrupt transpacific trade routes and impact cargo flows between Asia and North America.
  • Port of Halifax: Despite reaching a deal recently, workers at the Port of Halifax may strike over proposed automation plans. If their concerns are not addressed, a strike could disrupt operations at this key entry point into Canada.

Fleet Developments

  • New Vessel Additions: Approximately 400 new container ships are being added in 2024, with more planned for 2025. This expansion may influence capacity and rates, but the benefits could be offset by the aforementioned routing changes and labor disruptions.
  • Retirement of Older Ships: Environmental policies are accelerating the retirement of less efficient vessels, balancing capacity increases from new ships.

Challenges

  • Infrastructure Limitations: Port congestion and inadequate facilities could hinder efficiency despite increased vessel capacity.
  • Geopolitical Risks: The crisis in the Middle East and potential labor strikes represent significant risks to stable shipping operations, necessitating contingency planning.

Suez Canal Considerations

While the Suez Canal is a crucial passageway for global trade between Asia and Europe, current geopolitical tensions in the Middle East are affecting its viability as a primary route.

Current Status and Developments

  • Route Alterations: Due to the escalating crisis in the Middle East, shipping companies are reconsidering their use of the Suez Canal. The conflict-related disruptions is leading carriers to reroute vessels via the Cape of Good Hope, despite the longer journey and higher costs.
  • Impact on Transit Times and Costs: Routing around the Cape of Good Hope adds significant distance to voyages, increasing fuel consumption and transit times. This shift may lead to higher freight rates and scheduling challenges.

Future Outlook

  • Infrastructure Investments: The Suez Canal Authority continues to invest in infrastructure enhancements to improve capacity and safety. However, geopolitical stability is a critical factor influencing its utilization.

Conclusion

The ocean freight market in key Asian trade lanes faces a complex array of challenges in 2025, including geopolitical tensions, potential labor strikes, and shifts in routing strategies. These factors, combined with capacity expansions and regulatory changes, will shape pricing and operational dynamics. Stakeholders should monitor these developments closely and engage in strategic planning to navigate the evolving landscape effectively.



en_CAEnglish (Canada)