Freight Market Update – June 2025

The global freight market is facing challenges like fluctuating rates, changing trade policies, and capacity issues. Shipping rates are rising, especially on Asia–Australia routes, due to high demand and limited capacity. Port congestion in Europe and geopolitical issues add to the strain. Despite these challenges, there is cautious optimism with signs of recovery in sea and air freight. In Australia and New Zealand, cargo volumes are increasing, but delays continue.

Freight Market Rates / Rate Restorations

The Drewry World Container Index rose by 2%, leaving freight market rates $2,276 per 40-foot container as of 22 May 2025. This increase indicates a shift from last month’s decline due to:

- Increased demand

- Changes in carrier capacity

- Influences from US-China trade dynamics

The year-to-date average is $2,723, which is below the 10-year average of $2,897.
Spot rates may rise further, depending on:

- Trade policies

- Demand

Despite limited success in rate restorations, the market is impacted by:

- Overcapacity

- Low demand

Intra-Asia spot pricing is expected to remain stable.
Several carriers, including MSC, ZIM, OOCL, and COSCO, have announced rate restorations effective 15 June 2025. These restorations apply to shipments from Asia to Australia and New Zealand, with specific surcharges applied.

Freight Market Supply / Demand

Supply

Port congestion is worsening globally, particularly in northern Europe, due to labour shortages and low water levels on the Rhine River. This congestion has led to significant delays in Bremerhaven, Hamburg, and Antwerp. On the Transpacific route, demand is rising as shippers act before the US-China tariff pause ends, resulting in tight capacity despite the reinstated services. Rates are increasing, with the Shanghai Containerised Freight Index up 5% weekly. In Asia–Europe trade, capacity is stable but could be affected by European congestion and geopolitical issues. US tariff threats on EU goods add uncertainty, impacting capacity and deployment. Secondary trade routes are facing capacity shifts, with rates between Asia and South America surging. Overall, capacity remains volatile due to geopolitical risks and labour constraints, with carrier agility helping to mitigate impacts.

Demand

Despite easing tariff and trade risks, global trade remains fragile. A US-China agreement to reduce tariffs boosted market optimism, but uncertainty persists with sector-specific tariffs and high US tariff rates. Business confidence is shaky due to the unpredictability of trade policies. Global growth forecasts remain stable but low, with GDP growth expected to slow in early 2025. Shipping faces challenges like changing demand and weaker freight volumes. While tariff cuts offer some hope, lasting trade recovery is uncertain without a stable policy framework.

Regional Trade Trends

Trans-Pacific booking volumes have surged by 300% due to a temporary tariff pause, indicating a significant urgency among shippers.
Demand on the China–North Europe route has seen a slight improvement. The Europe–China route has experienced a weakening in demand.
Rates on the China–Mediterranean route have remained stable.
Transatlantic trade is steady, supported by tariff frontloading.

Near-Term Freight Market Sentiment

Market sentiment is cautiously optimistic due to a temporary rollback of US-China tariffs, leading to a surge in trans-Pacific bookings. However, the sustainability of this trend is uncertain due to policy volatility. Capacity is tightening as carriers adjust services, raising concerns about vessel shortages. Port congestion in Europe and peak season signs in North America add pressure. The tariff truce offers short-term relief, but risks of re-escalation and economic fragility persist.

Key Risks in the Freight Market at Present

The US-China tariff pause is temporary and may not cover key sectors, risking renewed tariffs that could affect demand and rates. Vessel shifts to the trans-Pacific might disrupt other routes, impacting schedules and service. Port congestion, worsened by labour shortages and delays, is increasing transit times and costs.

Meanwhile, Australian Border Force data shows cargo growth in April 2025 compared to 2024:

Sea Freight Market

Up 34% year-on-year
A 12% month-on-month increase compared to March.

Air Freight Market

Up 13% year-on-year.
1% decline month-on-month compared to March.

Total Cargo Reports (Air + Sea)

12.9 million cargo reports were lodged in April.
Up 13% year-on-year.

Geopolitical Issues

US Tariff – Latest Impacts

The US Court of International Trade has ruled that former President Trump’s tariffs are unconstitutional. This ruling, affirming Congress’s authority over international commerce, was subsequently overturned on appeal.
The decision could have significant impacts on global trade, supply chains, and tariff strategies.
Far East-US West Coast transpacific services will be reinstated due to increased cargo demand following the 90-day tariff pause.
TEU volumes at the Port of Los Angeles increased by 9.4% in April 2025, marking the third-strongest April on record.
China Briefing reports a 9.3% increase in China volume in May.
Importers are shifting their supply chains to South East Asia.
Major retailers are resuming imports with the tariff pause.
Carrier Response to 90-day Pause:

- Suspended services have been reinstated.

- Larger vessels are being deployed.

- Capacity is tight due to redeployments and congestion, particularly at Chinese ports.

US-UK Trade Deal

President Donald Trump and Prime Minister Keir Starmer announced a new U.S.-UK trade deal on the 80th anniversary of Victory Day. This agreement enhances US export opportunities, particularly in agriculture, aerospace, and pharmaceuticals, by removing trade barriers between the UK and the US. It offers a $5 billion chance for US producers, simplifies customs, and gives US companies an edge in UK government contracts. The deal also resolves issues such as tariffs on autos and metals, establishing a new framework for steel and aluminium trade. It’s seen as a significant achievement for American workers and a key part of Trump’s trade strategy.

Red Sea Shipping Update

On 6 May 2025, a US–Houthi ceasefire, facilitated by Oman, began, halting US airstrikes on Yemen and easing the Red Sea crisis. The Houthis agreed to stop attacking US ships in return for a cessation of American bombing. Still, the deal excludes Israel and Israeli-linked vessels, maintaining some threats amid the Gaza conflict. Iran praised the ceasefire as an end to US’ aggression’. Meanwhile, the Suez Canal offered a 15% discount to large container ships to encourage trade, effective from 15 May for a period of 90 days. Despite the ceasefire, Maersk and Hapag-Lloyd are cautious about resuming Red Sea transits due to security concerns. CMA CGM is cautiously increasing its use of the Suez Canal, with some services still diverted via the Cape of Good Hope, following a 15% transit fee rebate from the Suez Canal Authority.

Partial Ceasefire Impact

Despite a ceasefire, shipping lines doubt its stability, leading to the avoidance of the Suez Canal.
The Cape of Good Hope is now the preferred route, resulting in increased travel time and costs for Asia-Europe services.
Supply chains are experiencing delays and additional costs, with shortages anticipated to persist through summer.
Few vessels are using the Suez Canal due to security concerns in the Red Sea.
The US military has lost another F/A-18 jet in the Red Sea following a mishap.

India – Pakistan Relationship

Trade tensions between India and Pakistan have disrupted cargo and supply chains. Following a terrorist attack, India banned imports from Pakistan and barred Pakistani vessels. Pakistan responded by blocking Indian goods and limiting exports. These actions are affecting transhipment routes and third-country logistics, causing delays, vessel re-routing, and re-stows.

Shipping Competition

The Federal Maritime Commission is investigating if foreign vessel flagging laws harm US ocean trade, seeking input from experts, governments, and labour groups on the impact on supply chain efficiency and reliability.

Mergers/Acquisitions

The ACCC will announce its decision on the DP World Australia and Silk Logistics Holdings acquisition on 10 July 2025, following a delay in gathering more information.
Lindsay Australia has acquired SRT Logistics for $108.2 million, expanding into Tasmania.
Toll Group has acquired Transolve Global to boost its international freight capabilities.

Schedule Reliability

Global schedule reliability is improving, with March showing a rise to 57.5%, the highest since November 2023. However, recovery is uneven across routes, and recent gains may be due to new alliance structures rather than consistent performance. The industry is stabilising despite geopolitical challenges and vessel diversions. Despite improving reliability scores, the market remains cautious due to potential disruptions from vessel diversions and geopolitical issues, which require careful management.

Alliance Landscape Changes

Maersk and Hapag-Lloyd is launching a new TP9/WC6 Gemini service on the Pacific from Xiamen and Busan to Long Beach.

Cancellations – Blank sailings Decline

Global blank sailings have decreased to 6% from 10% in weeks 22 to 26, showing short-term stability. The Transpacific route experienced a 27% increase in spot rates, driven by rising demand. Schedule reliability is expected to improve, but capacity issues persist. In Australia, the China-Australia trade saw a drop in cancellations to under 5%, down from 13% in April, indicating better planning or demand stability. However, market volatility remains a concern.

Global Port Congestion Hotspots

Ports in Shanghai and Ningbo are experiencing heavy congestion.
Qingdao has a queue-to-berth ratio of 1.32.
Significant congestion is affecting European ports, including Antwerp, Hamburg/Bremerhaven, Rotterdam, and Gibraltar.
Singapore is also becoming a concern due to increasing congestion.
Gibraltar’s queue-to-berth ratio stands at 2.15.

Equipment

While no equipment issues have been reported in China, increased bookings for China-US trade could lead to equipment build-up in the US, potentially risking shortages elsewhere. Australian exporters are already experiencing some equipment shortages.

Global Air Freight Market Update

Spot Rates

Worldwide average spot rates climbed +2% week-on-week (WoW) but remain -3% lower year-on-year (YoY).

Tonnage

Global chargeable weight rebounded +6% WoW, primarily driven by Asia Pacific’s +11% WoW recovery.

Air Freight Market Trends

The US-China tariff changes caused market fluctuations, with a slump in early May followed by a rebound after a tariff suspension on 12 May. Trade volumes on Asia–Europe and Transpacific routes have returned to pre-April levels, and China and Hong Kong are approaching peak-season highs for 2024.

Capacity

Capacity trends show airlines are responding to demand shifts:

Global cargo capacity rose +4% YoY
Asia Pacific saw +5% capacity growth
Europe +6%, CSA +3%, North America flat, MESA -2%

Sustainability

The Mediterranean Sea will become a sulphur Emission Control Area from 1 May 2025, requiring ships to use fuel with a sulphur content of no more than 0.10%. This change, supported by the IMO and Mediterranean nations, aims to cut SOx emissions by 79% and improve air quality, reducing health issues and enhancing visibility. However, it may increase shipping costs due to the need for low-sulphur fuel or exhaust scrubbers, potentially affecting freight rates.

The Port of Ningbo-Zhoushan— the world’s largest by cargo throughput — is collaborating with European ports to establish green shipping corridors, aiming for net-zero emissions through enhanced infrastructure and the adoption of renewable energy. Despite a rise in such projects, challenges such as high costs and a lack of incentives persist.

Terminal and Port Update

MSC is leading a $22.8 billion deal to acquire 43 global port assets, including two in Australia. This move, supported by BlackRock, faces political scrutiny and antitrust reviews. If completed, MSC will become the largest terminal operator, enhancing its global shipping presence.

Victoria International Container Terminal (VICT) is buying four hybrid straddle carriers to increase capacity and reduce emissions. These carriers, arriving in 2026, are expected to boost efficiency by 40% and reduce CO2 emissions by 50 tonnes per unit annually.

Patrick terminals

Brisbane: Delays approx. 0 – 0.5 day
Fremantle: Delays approx. 0 – 0.5 days
Sydney: Delays approx. 1 – 2 days
Melbourne: Delays approx. 0 – 0.5 days

DP World Terminals

Brisbane: Delays approx. 0.5 – 1 day
Still issues with equipment outages
Fremantle: Delays approx. 0 – 0.5 days
Sydney: Delays approx. 1 – 2 days
Melbourne: Delays approx. 0 – 0.5 days

VICT

Melbourne: Delays approx. 0.5 day
Flinders Adelaide Container Terminal (FACT)
Adelaide: Delays approx. 0.5 day

AAT

Brisbane: Working with minimal delays.
Port Kembla: Berth congestion is expected between 30 May and 4 June.
Melbourne – Appleton Dock: Working with minimal delays.
Melbourne – Webb Dock (formerly MIRRAT): Working with minimal delays.

New Zealand

Auckland: minimal delays approx. 0.5 – 1 day
Tauranga: minimal delays approx. 1 – 2 days
Napier: minimal delays approx. 0.5 – 1 day
Lyttleton: minimal delays approx. 0.5 – 1 day

Magellan Logistics provides freight and logistics services to all industries, including sea freight, air freight, customs clearance, and a digital freight portal, offering 24/7 visibility of all your shipments. Keeping customers informed about changing market conditions is crucial to our approach.

Our dedicated and professional team would be delighted to assist your business. If you have questions about the freight market update, please get in touch with one of our freight specialists or call us at AUS 1800 595 463 or NZ (09) 974 4818.

Sources: With thanks to the Freight and Trade Alliance for their freight market update.