In 2024, due to the Red Sea crisis, the shipping cost of textile exports will often double, making many textile enterprises miserable. However, with the gradual easing of the Palestinian-Israeli situation, there is a clear downward trend in shipping costs in 2025.
Freight or welcome 'price war'
Sea-intelligence, a prominent maritime consultancy, wrote that if container shipping lines can safely cross the Red Sea and Suez Canal again, it could spark a "price war."
Over the past year, the safety of shipping routes has become a major concern for global logistics, particularly around the Red Sea and Suez Canal. Attacks on commercial vessels by the Iranian-backed Houthi group have led many shipping companies to choose to bypass southern Africa, avoiding the Red Sea and Suez Canal, an important global shipping corridor. Once the situation in the Red Sea stabilizes and shipping companies reopen this route, there may be a "price race" and freight rates will show a rapid downward trend.
If the Red Sea route is reopened, container freight rates are likely to fall 60-70 per cent within six months, according to Sea-Intelligence, a shipping analyst. This change will profoundly affect the supply and demand landscape of the global shipping market and could bring similar or more severe market conditions to the end of 2023.
Analysts believe that once shipping companies resume the use of the Red Sea route, freight rates are likely to fall sharply. Due to the oversupply of market demand, the container shipping market will fall into a "price competition". In order to compete for market share, shipping companies may be willing to cut prices to attract customers.
In addition, global shipping capacity has grown rapidly in recent years due to high profits.
Global capacity is rising rapidly
According to Adam Kent, managing director of industry research firm Maritime Strategies International, the shipping industry is facing its worst excess capacity since 2007. Kent pointed out that in 2024, with the exception of dry bulk carriers, the order volume of all other ship types has increased significantly. Last year's global new shipbuilding order book is likely to be the second highest on record, with orders for the full year of about 125 million deadweight tons (DWT), second only to 2007's order book of about 170 million DWT.
According to the data, shipyards received 24% more orders in 2024 than in the previous year, especially for container ships, tankers and liquefied natural gas vessels. According to the new data, orders totaled $190.3 billion.
Kent expects shipping earnings to decline in the next few years, but he stressed: "This is a modest correction, not a collapse." Current earnings are still relatively high by historical averages. He also expects prices for new ships to ease.
China has become the dominant player in the global shipbuilding industry, producing about 60 percent of commercial vessels and nearly 50 percent of specialty vessels. "The progress of China's shipbuilding industry may have taken many people by surprise, especially the speed at which it has improved productivity," says Mr Kent.
Tariffs could be a big factor
In addition to the news of route and shipping capacity, tariffs are also an important factor affecting shipping prices.
New U.S. President Donald Trump's trade policy is in focus for the market. In addition to tariff adjustments to Mexico, Canada and China, a series of changes in its trade policies could affect the volume of global trade and the flow of goods, thereby changing the demand for capacity and freight trends in the seaborne market.
At the same time, tightening environmental, social and governance (ESG) standards in regions such as the European Union are reshaping the operating structure of the shipping industry, prompting shipping companies to accelerate the transition to a greener operating model, but this also inevitably brings upward pressure on operating costs. Although the specific details are yet to be revealed, the imposition of tariffs will undoubtedly trigger a chain reaction in the global shipping market, which will affect far more than the contraction of transatlantic trade, but also affect the supply and demand of containers, transit strategy adjustments and changes in cargo types.
The global serious inflation has largely suppressed the growth of textile foreign trade, if the freight can really decline, it is not a bad thing for textile foreign trade. However, the sharp rise and fall in the short term often bring a lot of unexpected chain reactions, adding a lot of risks to the business.
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