Air & Ocean Freight Market Trends: Outlook for 2025

As we navigate through increasingly complex global supply chains, the air and ocean freight markets stand at a critical juncture heading into 2025. With emerging technologies and evolving environmental regulations reshaping the industry, logistics leaders must adapt to stay competitive.  

In our exclusive interview with industry experts, Joshua C. Bowen, Global Head of Ocean Freight, and Jérôme Petit, Global Air and Ocean Leader, CEVA Logistics, we explore the anticipated trends shaping the air and ocean freight markets as we approach 2025. 

Q1: What do you forecast when it comes to the balance between supply and demand for air and ocean freight in 2025? 

Joshua: While the Drewry World Container Index projects demand growth of 3-4% in 2025, I think 3% is more realistic when it comes to ocean freight. Next year is going to be very strained, particularly in the U.S. market, due to low consumer confidence and increasing import tariffs. We're already seeing demand starting to slow down despite September being a record month. Manufacturing indices in China, United States and Europe were all below expectations in Q2 of this year. The five-year projection is around 3.3%, but this could be optimistic given current trends.  

On the supply side, we're seeing a significant increase in capacity. There are a lot of new cargo ships entering the shipping market, increasing the overall transport capacity available. If there is no economic growth to absorb this extra capacity, we'll face a challenging situation. Carriers might need to return to blank sailings and remove capacity, or we'll see freight rates sharply drop.  

The industry could potentially face an issue of oversupply, especially if transport routes return to normal through the Suez Canal. The increased transit times, due to rerouting around the Cape of Good Hope, have temporarily absorbed some of the excess capacity, but if the situation normalizes, we'll likely see an imbalance between supply and demand. 

Jérôme: For air freight, we're seeing sustained demand driven by eCommerce. This sector is consuming available capacity and paying premium rates, which has a double impact. Ecommerce is absorbing available air freight capacity and thus increasing overall market rates.

Q2: How do you predict ocean and air freight rates to evolve between now and 2025 given current geopolitical turmoil? 

Joshua: Several factors will influence rates, including the ongoing International Longshoremen’s Association (ILA) negotiations in U.S. East and Gulf ports. The situation on the East Coast is particularly volatile. While the ILA has agreed to meet salary terms, they haven't accepted the increase yet. This means they could technically go back on strike at any time if negotiations deteriorate. The threat of disruption still looms which has a massive impact on logistics across the globe. 

The expiration date for the current agreement is quickly approaching in January, but salary and automation are still polarizing issues in the negotiations. Many people felt confident that since salaries had been agreed upon, there would be a return to normalcy. However, it's crucial to note that the ILA longshoremen have not yet accepted the salary increase; they've only agreed to the terms. 

This is significant because if they had accepted the increases, which would have been retroactively applied, it would have shifted the bargaining power. By not accepting the increase, they maintain the ability to strike if negotiations become tumultuous. We could potentially see strikes happen even before January if the situation deteriorates. 

The impact of this uncertainty is already visible. We're seeing some congestion on the West Coast, with containers staying on dock for approximately ten days. This is partly due to companies rerouting supply chains to the West Coast in anticipation of East Coast issues. Many companies are unwilling to change these routes until a formal agreement is reached on the East Coast. 

Beyond the ILA situation, we have other geopolitical factors at play. The ongoing Red Sea crisis could significantly impact routes and rates if it escalates any further. The recent U.S. presidential election comes with uncertainty with potential policy changes that could impact trade, including the potential for a 20% increase on all international Imports into the USA and a 100% increase on everything from China. These increases would dramatically impact all containerized cargo movements, especially on Asian export routes. Despite these challenges, global ocean freight rates are still 140% higher compared to 2019. I expect headhaul trade to return to historical levels by mid-year 2025. 

Jérôme: For air freight, the eCommerce trend is set to continue growing, maintaining strong demand and higher rates. Current policies allow tax-free imports under USD $800 in the United States, which companies like Temu and Shein have effectively leveraged. Any changes to this policy could impact air freight demand and rates. Even with potential changes, new policies take time to implement and affect the market. We might see effects in late Q3 of next year, meaning 2025 will likely still see strong air freight markets. Despite potential changes in the United States, eCommerce growth continues to rise in other regions with lower tax-free thresholds, suggesting continued strong demand for air freight. In fact, Air China has already announced their rate increases. 

Despite this uncertain environment, CEVA Logistics will launch a new dedicated flights program, as of April 2025, 3 times a week from China to Los Angeles and Chicago for 12 months, with a clear objective to secure both capacity and a competitive rate for our customers on the Transpacific.

Q3: What impact will the changing shipping alliances of 2025 have on the capacity and reliability of global shipping?  

Joshua: The Gemini Alliance between Maersk and Hapag-Lloyd aims to increase reliability. You can expect increased transit time on average, but more reliability. They're moving towards a hub-and-spoke network, focusing on major ports. If they can commit to 21 days transit with 90% reliability, that's an improvement compared to the current situation where reliability struggles to surpass 55%. 

I think next year we will see a continued improvement in stability. The story of 2025 is going to be increased capacity and improvements in reliability. I don't think it'll get to 80%, but I expect to see percentage increases every quarter. 

Q4: What measures are being taken to reduce climate impact by 2025 and beyond? 

Joshua: The reality is that there are easy decarbonization solutions available with biofuels, but there's very little uptake from customers who are ready to make the investment. There is a big gap between what companies announce and what they actually do in practice. The problem in the logistics industry is that sustainability often comes down to a transactional cost and in the wake of economic instability, less are willing to take the risk. 

Here at CEVA, we're fully invested, including proactively buying biofuels from our partners and making them available to our customers. CEVA’s parent company, the CMA CGM Group, has invested in reduced-carbon ships prior to it being a requirement. We've also partnered with Zephyr & Borée for wind-powered vessels that are scheduled for 2026 on transatlantic routes. The new vessels will produce the lowest carbon emissions of any cargo transport across a large body of water. 

We're working on creative approaches to sustainable logistics here at CEVA. One idea we're developing is the concept of a “carbon savings account” or “carbon checking account.” The idea is that a customer could pay a lump sum at the beginning of the year to help achieve their sustainability goals. We would then manage that money and apply it to more sustainable shipping solutions for their shipments throughout the year, providing recognition of those efforts on a quarterly basis.  

We're trying to shift the mindset from viewing sustainability as a transactional cost to seeing it as an upfront investment. The big question though is whether or not companies are more willing to spend on sustainability upfront rather than as an ongoing operational cost. 

Looking ahead... 

The outlook for 2025 presents both challenges and opportunities for air and ocean freight. While oversupply concerns and geopolitical tensions create market uncertainty, emerging sustainability initiatives and technological advancements offer promising solutions for the industry’s future. The threat of the ILA strike at U.S. ports still looms, causing an overall sense of uncertainty. 

As carriers adapt to new alliances and environmental regulations, the success of stakeholders will largely depend on their ability to balance operational efficiency to remain agile to the evolving market dynamics. While logistics providers are providing alternative sustainable shipping solutions, businesses are struggling with committing given the capital investment required. We are optimistic to see changes in mindset and the overall view of sustainable logistics in 2025 and beyond.