by Lloyd's List

24 April 2025 (Lloyd's List) - CONTAINER shipping demand growth will fall into negative territory in 2025 for only the third time in the industry’s history as a direct consequence of US trade policies.

This was the frank and sobering conclusion of London-based analyst Drewry’s revised forecast for the liner sector, amid Trump 2.0’s continued ‘America first’ campaign rhetoric.

Drewry container research senior manager Simon Heaney said that the new US administration had taken a chainsaw to the rule books on governance, foreign diplomacy and international trade.

Speaking in a webinar, Heaney said container shipping found itself in the crosshairs of this geopolitical economic warfare, and would be significantly distorted during this process, and “not for the better”.

As a result, Drewry expects global port throughput, including laden, empty and transhipment liftings, to fall 1% in 2025 on last year, a similar contraction to that witnessed during the pandemic in 2020. The only other time the industry saw traffic volumes slip back year on year since records began in 1979 was in the fallout of the global financial crisis in 2009.

While the demand deficit will be similar to that of 2020, Heaney stressed that the outlook for the sector is arguably even more uncertain now than it was during this period.

“The difference now is that then the world quickly got to grips with the risks that Covid presented, and once it was fully understood, we were able to plot a recovery in a remarkably short space of time,” said Heaney.

Fast forward to today and Trump’s policy decisions or executive orders relating to trade have little quality of permanence, he explained.

“Business shrivels in chaotic uncertainty, and very few are prepared to make significant investments in such a climate.”

Heaney admitted that such ambiguity makes Drewry’s forecast difficult to decipher, with lingering questions over the prospect of a looming economic recession or indeed whether the US administration might reverse court and bow to public pressure, choosing to review or lessen the extent of current tariffs.

In this context, Drewry’s trade forecast for the container shipping market or any market currently has an extremely short shelf life, Heaney said.

“We’re in coin flip territory, as we await what happens during the 90-day pause on the reciprocal tariffs that will end in early July,” he said.

Drewry’s demand downgrade follows the International Monetary Fund’s move earlier this week to lower its global GDP outlook for this year from 3.3% to 2.8%. This was also a result of US trade policy.

The IMF downgraded its GDP outlook for the US in 2025 to 1.8%, a fall of nearly one percentage point from its previous 2.7% forecast in January. Meanwhile, the World Trade Organisation expects to see a 0.2% fall in merchandise trading for this year under current conditions.

North America, which has been a key growth driver for container shipping in recent years, will bear the brunt of the trade downturn, according to Drewry.

In 2025, Drewry said that it expects North America, including Canada and Mexico in addition to the US, to see box volumes traded in the region to dip 5.5%. This will be followed by a successive loss of a further 4.6% in 2026.

Similarly China, unsurprisingly, will not be immune to the trade war it is currently engaged in with the US.

At this stage, Drewry is expecting containerised cargo in and out of China to fall back 4.8% in 2025 on last year’s levels. But it said trade will be more resilient thereafter than its US counterparts. 

“We do expect it [China] to get back on the growth track much sooner than North America as it will be able to find new markets,” noted Heaney. Drewry’s forecast is for Chinese trade to bounce back by around 1.6% next year on its 2025 total.

Heaney said there would be little upside from the current trade war, as he sympathised with liner executives trying to game plan for Trump 2.0.

“Certainly, other countries will do more trade with one another, but any gains from this or new market disruption, such as port congestion or temporary capacity shortages or fast growing trade, will be small when compared to the wider contraction in overall demand for their [liner] services.”

The impact of US trade policy is also not helped, he explained, by the fact box shipping is already “heavily oversupplied”, which only intensifies the risk factor.

“Damage limitation is the name of the game,” said Heaney.

To mitigate for a decline in US trade, carriers will have to invest more in emerging trade routes and reduce their operational costs wherever they can, according to Heaney.

Carriers have already pulled significant capacity from US facing trades in recent weeks, most notably the transpacific, however, as Heaney explained this is merely a stop gap solution. 

“Longer term carriers will need to consider a more holistic downsizing of their fleets.”

Vessel idling and scrapping could also provide at least some relief, which Drewry expects to ramp up in the coming months. While there is also the option to push back or try to delay newbuilding deliveries, according to Heaney.

“Even in possibly the worst case scenario, we could see some cancellations of recent orders.”