Labor Strife and Tariffs Cast a Long Shadow Over Ocean Shipping in 2025

Analytics

Ocean Shipping in Turbulent Waters

Ocean shippers can’t be blamed for feeling a little seasick. Port strikes, trade concerns, changing carrier alliances, and geopolitics will continue to roil maritime transportation in 2025.

Red Sea Challenges

The attacks on Red Sea shipping by Yemen-based Houthi rebels that all but shut down the Suez Canal to major carriers and reshaped global supply chains have shown signs of abating. The attention of Iran, the Houthis’ main sponsor, has been distracted by serious domestic issues, and Russia is dealing with an expensive war with Ukraine. Consequently, the Houthis have shifted their military efforts toward Israel.

Nearly all major ocean container lines in 2024 began diverting services away from the Red Sea and around the Horn of Africa. These routes, albeit more expensive, resulted in a windfall for carriers, boosting profits significantly. Therefore, it's likely that container lines will be in no rush to return to the region immediately.

Shifting Alliances

The maritime industry is seeing shuffling among carriers in alliances, vessel-sharing agreements, and slot exchanges. New arrangements are scheduled to take effect soon.

“MSC is going solo, while Maersk and Hapag-Lloyd have formed the Gemini Cooperation,” said Lars Jensen, CEO of Vespucci Maritime. Meanwhile, the Federal Maritime Commission is reviewing the competitive impact of The Premier Alliance, involving Yang Ming, ONE, and Hyundai.

The Impact of Tariffs

Debates over threatened tariffs under the incoming administration are ongoing, with significant changes to supply chains already in process. Tariffs on China, expanded under President Biden, have led to Mexico surpassing China as the U.S.'s top trade partner. American companies are moving manufacturing to Mexico to benefit from lower costs and favorable cross-border facilitation.

China has responded by nearshoring production for U.S.-bound exports to Mexico, taking advantage of better terms for 'Made in Mexico' products. This strategic shift has influenced ocean carriers to offer more direct services from Asia to North American gateways.

The Rise of the Dark Fleet

The maritime industry is also concerned about the Russian 'dark fleet'—older ships without proper insurance and opaque ownership. These vessels are susceptible to fraud and represent a threat to global maritime stability. The International Maritime Organization (IMO) has implemented measures to strengthen jurisdiction over these commercial vessels.

Port Labor Strife

Negotiations are expected to resume between the International Longshoremen’s Association (ILA) and port employers, amidst a backdrop of strikes and disputes over automated container-handling. An agreement by January 15 remains pivotal to avoid potential disruptions.

Ocean carriers are advising shippers to clear out loaded containers as discussions progress. Although disruption is possible, carriers have demonstrated resilience by finding profitable avenues even when regular operations are hindered.


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The post originally appeared on FreightWaves.

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