Sea freight from January overall increase, what is the reason behind?
Recently, a number of world-renowned shipping companies announced that from January 1, 2025, they will comprehensively increase shipping fees. The news has attracted widespread attention and has had a profound impact on global trade patterns.
It is reported that many shipping giants such as Mediterranean Shipping (MSC), CoSCO Shipping, Yangming Shipping, Maersk, CMA CGM and HMM have issued price hike notices. Taking Mediterranean shipping as an example, from January 1, 2025, the rate per 40-foot container on the West Line will rise to $6,150, and the rate on the East line will rise to $7,150. Cosco Shipping also raised the freight rate of the US-West line to $6,000, and the US-East line to $7,000. Yangming Marine plans to raise the Consolidated rate surcharge (GRI) to about $2,000 per 40-foot container in both West and East.
The reasons for the sea freight price increase are complex and diverse, involving market supply and demand changes, rising costs, external environmental impact and industry competition strategy.
The change of market supply and demand is an important factor leading to the increase of sea freight. As the global economy gradually recovers, trade activity has increased significantly, and transportation demand has risen accordingly. Especially in the run-up to the Lunar New Year, factories are eager to complete orders and shipments before the year, driving the surge in demand for container shipping. The cargo volume of the United States route has increased significantly, and the loading rate of some routes is high, such as the high loading rate of the European line, which makes the shipping company have the confidence to raise prices.
Rising costs are also a key factor driving up sea freight rates. The Panama Canal Authority's new LoTSA system has led to significant increases in operating costs for shipping companies such as CMA CGM. In order to recover the additional cost, the shipping company chose to impose a surcharge. In addition, due to the Palestinian-Israeli conflict, some ships choose to sail around the Cape of Good Hope, increasing the distance, time, fuel consumption and operating costs. These factors have combined to push up the cost of shipping, which in turn has prompted shipping companies to raise rates.
The uncertainty of the external environment has also had an impact on sea freight rates. There is still a risk of strike at the East Coast of the United States, and enterprises accelerated shipments in advance to avoid the strike affecting shipments, which further promoted the rise in freight rates. At the same time, uncertainty factors such as emerging tariff policies and strict export restrictions that may appear in 2025 have also prompted enterprises to prepare and ship goods in advance, increasing transportation demand.
The competitive strategy of the industry is also one of the reasons for the price increase of sea freight. Although from February 2025, the three major shipping alliances will be restructured and the market will be more competitive, in January, shipping companies still hope to obtain higher profits through price increases. Some shipping companies have begun to actively compete for supplies and customers to cope with future competition. Through technical adjustment of shipping space, reducing supply and other measures, shipping companies effectively control market liquidity, and with the atmosphere of price increases, guide customers to expect freight rates will continue to rise.
The increase will have a profound impact on global trade patterns. On the one hand, the price increase will increase the transportation cost of enterprises, and have a greater impact on small and medium-sized foreign trade enterprises. Some companies may be forced to suspend shipments due to high costs, leading to further backlog problems. On the other hand, the price increase will also prompt enterprises to optimize supply chain management and improve transportation efficiency to reduce costs. At the same time, shipping companies will also gain higher profits through price increases and further consolidate their market position.
According to Shipping Weekly analysis, with the acceleration of the recovery process of the global economy, the shipping industry will usher in new development opportunities. However, in the face of the complex and changing international situation and fierce market competition, shipping companies and cargo owners need to work more closely together to meet the challenges. By optimizing supply chain management, improving transportation efficiency and reducing costs, we will jointly promote the prosperity of global trade.
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