Shipping Giants Announce Price Hikes Exceeding $6,000 in 2025

Recently, several well-known global shipping companies announced that they will fully raise shipping costs starting from January 1, 2025. Shipping giants such as Mediterranean Shipping Company (MSC), COSCO Shipping, Yang Ming Marine Transport, Maersk, CMA CGM, and HMM have all issued price increase notices. MSC’s rates for the West Coast of the U.S. will increase to $6,150 per 40-foot container, while the East Coast rate will rise to $7,150. COSCO Shipping will also raise its West Coast rate to $6,000 and the East Coast rate to $7,000. Yang Ming plans to increase its General Rate Increase (GRI), with both West and East Coast rates increasing by approximately $2,000 per 40-foot container.

However, industry insiders pointed out that despite several shipping companies planning to raise prices starting January 1, they have not rushed to make public statements. Starting in February next year, the three major shipping alliances will be restructured, intensifying market competition. Shipping companies have already begun actively competing for cargo and customers to respond to potential market changes. Both shipping companies and freight forwarders stated that the final price increases and their success will depend on the market supply and demand relationship. Additionally, if strikes occur at U.S. East Coast ports, it will undoubtedly affect shipping rates after the holidays. Moreover, several shipping companies plan to expand capacity in early January to capitalize on high freight rates.

The reasons for this increase in shipping fees are complex and varied, involving changes in market supply and demand, rising costs, external environmental influences, and industry competition strategies. Changes in market supply and demand are a significant factor driving up shipping fees. As the global economy gradually recovers, trade activities have significantly increased, leading to a rise in transportation demand. Especially with the approaching Lunar New Year, factories are eager to complete orders before the holiday, driving a surge in container shipping demand. Cargo volumes on U.S. routes have notably increased, with some routes experiencing high vessel loading rates, such as the high loading rates on European routes, giving shipping companies confidence to raise prices.

Rising costs are also a key factor pushing up shipping fees. The Panama Canal Authority implemented a new "Long-Term Slot Allocation" (LoTSA) system, significantly increasing operational costs for companies like CMA CGM. To recover these additional costs, shipping companies have chosen to impose surcharges. Additionally, due to the impact of the Israel-Palestine conflict, some vessels have chosen to detour around the Cape of Good Hope, increasing travel distance, duration, fuel consumption, and operational costs. These factors collectively raise shipping costs, prompting shipping companies to increase freight rates.

External environmental uncertainties also affect shipping fees. The risk of strikes at U.S. East Coast ports still exists, prompting companies to accelerate shipments to avoid disruptions, further driving up freight rates. At the same time, potential new tariff policies and strict export restrictions in 2025 also push companies to stockpile and ship early, increasing transportation demand.

Industry competition strategies are another reason for the rise in shipping fees. Although the three major shipping alliances will be restructured starting in February 2025, intensifying market competition, shipping companies still hope to achieve higher profits through price increases in January. Some shipping companies have begun actively competing for cargo and customers to prepare for future competition. Through technical adjustments to slots and reducing supply, shipping companies effectively control market liquidity and, leveraging the atmosphere of rising prices, guide customer expectations that freight rates will continue to rise.

Regarding the trend of shipping rates next year, the Korean Trade Association conducted a survey of 413 shippers, shipping companies, and freight forwarders. The survey results showed that 74.4% of respondents believe shipping fees will rise or remain at current levels; among them, 39.8% expect rates to increase, while 34.6% think they will remain the same; only 23.6% predict that rates will decrease. In response to shipping companies' behavior of controlling supply through slot adjustments, Lee In-ho, vice president of the Korean Trade Association, stated that the association plans to collaborate with international organizations such as the Global Shippers Alliance (GSA) to jointly address the shipping companies' supply adjustment behaviors.

Freight forwarders estimate that while long-term contract rates next year may be higher than this year, spot market rates are unlikely to exceed this year's levels. Overall, shipping rates for the entire year are expected to be comparable to the fourth quarter of this year. Some large freight forwarding companies believe that shipping companies may continue to adjust rates through measures such as reducing sailings, so next year's freight rate levels may remain flat compared to this year. However, a senior executive from another publicly-listed freight forwarder predicted that the Red Sea crisis might be resolved next year. Once the crisis is resolved, vessels will no longer need to detour around the Cape of Good Hope, releasing additional capacity; combined with the increase in new ship constructions next year, market rates may see a significant decline in the second half of the year.

Exporters and logistics professionals believe that one of the reasons for the increase in shipping fees next year is the Houthi events in the Middle East, which require vessels to detour around the Cape of Good Hope, thus reducing the actual supply of vessels and exacerbating bottlenecks. Due to insufficient supply, shipping companies are also further restricting supply by implementing temporary suspensions and vessel repairs to maximize profits. Additionally, if the tariff policies proposed by Trump are implemented, shipping fees may rise sharply in the short term due to the rush to avoid high-tariff cargo. Historical experience shows that after Biden announced increased tariffs in May last year, the SCFI surged by 62% two months later.