U.S. tariff uncertainties, geopolitical risks in the Red Sea, and vessel fleet expansion outpacing demand are creating significant headwinds for the global container shipping market in the latter half of 2025.
H1 2025: Market stability better than expected
This is the key analysis from Mr. Daniel Richards, Senior Analyst at Maritime Strategies International (MSI), in a recent interview with Seatrade Maritime Podcast. The first half of 2025 witnessed relatively stable market conditions. On trade lanes outside the U.S., container shipping followed typical seasonal patterns – a slow period from January to May followed by a slight rate increase in June due to port congestion in Europe.
However, the U.S. market deviated from the usual trends, largely due to the unclear tariff policy of President Trump’s administration. Richards noted that the geopolitical uncertainty in the Red Sea and the anticipated fleet expansion have also played crucial roles in shaping the market landscape.
According to MSI, container freight rates fell 5% in Q1 2025 compared to Q4 2024, but remained 7% higher year-on-year. Q2 rates were mostly stable or slightly down.
U.S. tariffs – the key risk for the second half
The biggest looming risk is the potential implementation of new U.S. tariffs starting August 2025. Recent sharp drops in freight rates to the U.S. signal weakening demand, as shippers accelerate imports to avoid upcoming tariffs.
While container volumes rose 4–6% in the first half compared to last year, MSI forecasts a downturn in the second half of 2025, which may extend into 2026.
Red Sea instability disrupts global shipping routes
Geopolitical tension has resurfaced in the Red Sea. Attacks on commercial vessels in July have forced carriers to delay the resumption of services via the Suez Canal, opting instead for longer routes around the Cape of Good Hope. This diversion increases transit times, costs, and strains overall fleet capacity.
Fleet growth continues to exceed trade demand
Since the beginning of 2025, about 2 million TEUs of new container vessels—mostly large, dual-fuel ships—have been ordered. The global order book now exceeds 30% of the existing fleet capacity. Although small vessel orders are gradually rising to replace aging ships, the overall supply growth still surpasses trade demand.
MSI projects global container trade to grow by 3.5–4% in 2025, while the fleet is expected to expand by 6.5%. This imbalance may pressure freight rates to drop after the peak season.
Outlook for 2026: Oversupply remains a concern
Although the pace of new vessel deliveries may slow in 2026, the substantial order volume from the past 18 months will continue to exert supply-side pressure. If instability in the Red Sea persists, the global shipping industry could face a true oversupply situation—posing a major challenge for carriers heading into the next year.
Source VASEP
