by Lloyd's List
16 April 2025 (Lloyd's List) - A DOWNTURN in global container demand is to be expected during the Chinese New Year period, but the significant drop in volumes witnessed in February will have set alarm bells ringing ahead of the peak season and before the impact of the trade war starts to bite.
The latest official figures published by Container Trades Statistics, which have a two-month lag, showed that volumes of 13.1m teu in the most recent reporting month were down 13.6% on January 2025. While this reflects factory closures across China to mark the holiday season, however more telling was the decline was not only far greater than the 8.9% fall recorded last year, but volumes in February were also down 0.7% year on year.
“The last time we saw such a significant drop from January to February was in 2022, with a similar 13.6% decrease,” said CTS.
Despite February’s fall, volumes through the first two months of 2025 were still tracking ahead of last year at just over 2%. Even so, this marks a definitive slowdown in growth compared to the more than 6% growth recorded across 2024.
While some secondary deepsea trades have offered bright spots in the opening months of the year, including those out of the Indian subcontinent, Europe-South America and Asia-Africa trades, the most significant year-to-date gains have come via the major east-west trades, namely Asia-Europe and the transpacific.
Although traffic fell back in February on the Asia-Europe route by nearly 9%, year-to-date numbers through to the end of February still represent a 7.2% increase. On the transpacific trade, traffic in the opening two months of 2025 was up 6% on last year, including a 3.3% bump in February.
This resilience does, however, come with the substantial caveat of the looming impact of the tariff war, particularly for the transpacific trade where much of its recent growth has been largely due to front-loading to avoid impending levies.
Initial signs are that Asia-North America volumes in March were boosted by further front-loading to hedge against the raft of prospective tariffs on US imports in early April.
Last week, the port of Los Angeles on the US west coast reported further traffic gains in March, in a trend repeated at neighbouring Long Beach, which this week reported its busiest-ever three-month period for the first quarter of 2025.
The likelihood is that April will prove equally robust for transpacific traffic as the final pre-tariff cargoes arrive in the US, and most notably Chinese cargoes, which hold around a 40% share on the trade, being subject to tariffs of an eye-watering 145%.
While non-Chinese cargoes have not, at least for now, been subjected to so-called “reciprocal” tariffs by the US on its trading partners, retaining just a 10% global levy, the 90-day reprieve could prompt shippers to once again front-load cargoes from other countries, according to analysts Sea-Intelligence.
“Bookings to other countries than China, which were held back in the week leading up to the reciprocal tariffs are now being booked as fast as possible. But not only that, all US importers getting cargo from anywhere but China, are sure to fast-track volume in the next three months to move their peak season goods through customs before the July 9 deadline,” it said.
The analysts warned the absence of a deal with the US by Canada and Mexico, which has since seen tariffs of 25% reintroduced on its exports, serves as a precedence.
“No one knows whether deals will be made with specific countries or not by that time.”
“In other words, a boom and an early peak season into the US, will start right now.”
While this could support some volume growth in the near term, this will only delay the inevitable tail off in traffic and slump in US imports. And this could come soon rather than later amid a significant increase in blank sailings on the the transpacific trade in the coming weeks. Earlier this week, Sea-Intelligence data revealed just how aggressive carriers are becoming on pulling capacity, going from just 60,000 teu at week 12 of this year to 250,000 teu in week 13 and further increasing to 367,800 teu at week 15.
Of equal concern will be weakening sentiment among US consumers.
This week the National Retail Federation revealed that US retail sales grew in March after two straight months of declines, however, much of this increase was “partly the result of stocking up to get ahead of tariffs”.
“With the economic outlook unclear and the situation fluid, consumer sentiment is weakening, and many consumers are shifting disposable income into savings.”
A survey conducted by Prosper Insights & Analytics on behalf of the NRF found 46% of consumers were stocking up on household appliances, clothing and other items in early March over concerns they would become more expensive due to tariffs. The survey was conducted in early March before the trade war with China had escalated.
The importance of a healthy transpacific trade for liner shipping cannot be understated. Indeed, the route has been the principal driver of container shipping demand growth not just in recent months but in recent years.
The transpacific’s prospects while of concern are though still secondary to the possibility of a widespread recession if the trade war reverberates globally.
Sea-Intelligence noted the baseline outlook for the container demand in 2025 is for growth around 3.2%, matching the GDP outlook. This though was before the onset if the trade war.
“In 2009, during the financial crisis, we saw global demand decline -9% year on year. Whether the tariff war becomes as severe as the financial crisis is still entirely unknown, but even if the impact is half of the financial crisis, this would tip the global supply/demand balance away from a strong 2025 peak, and into overcapacity,” it warned.
