25/04/2025
--Outlook for container shipping 'more uncertain now than at the onset of Covid'--
Shippers are advised to prepare for “difficult operational and shipping conditions” as maritime analyst Drewry today revealed grim demand predictions for container throughput.
As the US administration “takes a chainsaw to the rule books on governance, foreign diplomacy, and international trade”, the outlook for container shipping is “more uncertain now than it was at the onset of the Covid virus”, said Simon Heaney, senior manager of container research at Drewry.
“The difference now is that then, the world quickly got to grips with the risks Covid presented… However, none of Trump’s policy decisions or executive orders relating to trade have any quality of permanence,” he explained.
“Business shrivels in chaotic uncertainty, and very few are prepared to make significant investments in such a climate.”
Indeed, today Drewry revealed “a much more pessimistic container demand outlook” than last month, with Mr Heaney adding: “There are going to be very few, if any, upsides for container shipping from this trade war.”
In its global port throughput forecast for loaded boxes, empties and transhipment moves, inbound and outbound, this year Drewry expects global container handling to decrease 1% this year.
“That’s roughly the same level of contraction the market saw in 2020 with Covid, and it would be only the third year with any annual decline since Drewry’s records started in 1979,” it said.
The years were 2009, following the global financial crisis, of 8.4%, and 2020’s decline of 0.9%.
For the North America region, Drewry predicts a decline of 5.5% this year, around 4m teu, to be followed “by another substantial loss”, of 4.6%, in 2026.
If even two-thirds of the current 145% tariff on Chinese imports into the US remains, Drewry estimates a loss of around 40% of volume on this trade. Drewry MD Philip Damas said it was uncertain if this would be destruction of demand or a shift of sourcing away from China.
Mr Heaney said the outlook for the Greater China region would be down 4.8% this year, but the country would “get back on the growth track much sooner than North America”, returning to around 1.6% growth next year as it finds new markets.
However, he added, US trade policy and subsequent trade forecasts are extremely volatile and subject to change. He said: “Any predictions we make for the container shipping market – or any market for that matter – have an extremely short shelf life.”
“I’d say we’re in coin-flip territory as we await what happens during the 90-day pause on tariffs, which will end in early July.”
While nothing has been officially announced, reports are circulating that President Trump will significantly reduce the tariffs on China – “but not to zero”, said Trump.
In response to the trade uncertainty, Drewry advised pausing shipments to assess the impact of tariffs, which would result in “a big reduction in volumes in April, and possibly May”.
Next, shippers will need to decide whether to replenish their inventory and pay the tariffs before the end of Mr Trump’s 90-day pause on countries other than China. This could result in a surge of shipments to the US in late June/July, and before the imposition of fines on Chinese ships calling at US ports from October.
“These big swings in demand have implications for vessel capacity, availability, and freight rates,” said Mr Damas, and he advised shippers to plan accordingly.
Shippers could also begin to consider shifting production to countries facing lower tariffs, if they haven’t already done so.
In recent Drewry surveys, shippers said they expected to source more from India, Brazil, Vietnam, Malaysia, Poland, and Turkey – all “very likely to see rising container traffic volumes”, predicted Mr Damas.
(source: https://theloadstar.com/outlook-for-container-shipping-more-uncertain-now-than-at-the-onset-of-covid/)
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