Logistics Market Update May 2025

Logistics Market Update May 2025

May 2025 Logistics Market Update | Forceget

Key Takeaways

  • 🌊 Ocean Freight Pressure Continues: Red Sea rerouting and blank sailings are still inflating transit times by up to 14 days, pushing spot rates higher on Asia–Europe and Transpacific lanes.
  • ✈️ Tariff Uncertainty Spurs Air Volumes: U.S. tariff deadlines triggered short-term air freight spikes, especially from China to the U.S., as shippers rushed to avoid additional duties.
  • 🔁 Strategic Shifts in Supply Chains: Businesses are diversifying sourcing and increasing use of digital tools to stay resilient amid global trade policy shifts, port congestion, and sustainability-driven cost changes.

Ocean Freight Market Update

Rate Trends and Capacity Adjustments

Freight Rates:

Ocean freight rates remained volatile through May as geopolitical uncertainty, Red Sea rerouting, and shifting tariff policies continued to disrupt global flows. The SCFI and FBX indexes both indicated upward rate pressure in key east-west lanes.

  • Asia–Europe: Rates saw moderate increases amid tighter capacity caused by Red Sea diversions. Carriers continued to blank select sailings, while demand ahead of the summer season held firm.
  • Asia–U.S. West Coast: Spot rates surged by mid-May, with shippers moving fast to beat tariff deadlines. Over 20% of transpacific sailings were blanked in early May due to continued cost control by carriers.
  • Asia–South America: Strong recovery in volumes from April carried into May, with improved stability and capacity utilization in Brazilian and Chilean ports.

Capacity Outlook:

  • Idle Fleet Levels: Idle capacity remained below 1%, reflecting high fleet deployment despite longer routings via the Cape of Good Hope. Utilization stayed strong due to reallocated capacity and improved schedule discipline.
  • New Vessel Deployments: Maersk, Hapag-Lloyd, and other major lines introduced new tonnage to absorb growing demand. Cape rerouting extended transit times but helped prevent rate collapses in key lanes.

Market-Specific Insights

Asia-Europe

  • Red Sea Detours Continue: Carriers are maintaining the Cape of Good Hope detour due to ongoing Red Sea instability. While some capacity has adjusted, transit times remain 10–14 days longer, and bunker fuel surcharges are increasing.
  • Overcapacity Risks: Carriers are balancing demand with blank sailings and sliding schedules to avoid excess capacity and keep rates stable.

Asia-U.S. West Coast

  • Tariff-Driven Volume Shifts: Spot rate volatility continues as U.S. importers accelerate shipments ahead of tariff policy changes. Over 25% of April sailings were blanked; May saw stabilization with stronger demand.
  • Q4 Planning Starts Early: Some shippers are front-loading ahead of summer to avoid peak-season congestion and delays.

South America

  • Rates Recovered: Asia–South America lanes saw a rate rebound in late April, continuing through May as backlogs cleared and demand strengthened.
  • Port Delays: Brazilian and Chilean ports are experiencing 3–6 day delays due to congestion and limited labor capacity.

North Europe

  • Extended Dwell Times: Congestion at major North European ports, especially Hamburg and Rotterdam, has led to 5–9 day delays on average.
  • Inbound Pressure: Backlogs at origin ports in Asia are causing misalignments in westbound schedules.

Environmental and Compliance Developments

EU Emission Trading System (ETS) Expands

  • Cost Impact Deepens: As more carriers hit the 100% compliance mark, ETS-related surcharges rose again in May, especially on North Europe lanes. This added an estimated $40–60 per TEU, depending on routing and vessel type.

IMO 2024 Regulations & Fuel Costs

  • Rerouting + Regulations = Cost Surge: The Cape of Good Hope detour, now in its fifth consecutive month, is compounding fuel use and emissions. As a result, GRIs (General Rate Increases) were pushed through mid-May on long-haul trades like Asia–Europe and Asia–USEC.

Congestion and Reliability

Global Schedule Reliability

  • Slight Recovery: Schedule reliability globally climbed to 67% in May (up from 65% in April), but major port congestion in East Asia and Southeast Asia continues to disrupt vessel timing.
  • Carriers adjusted schedules proactively to mitigate blank sailings, though consistency remains a challenge.

Vessel Delays

  • Delays Persist in Europe & U.S.:
  • North Europe ports (e.g. Rotterdam, Hamburg) still report 5–7 day delays, especially for transshipment cargo.
  • U.S. West Coast terminals experienced labour slowdowns and chassis shortages, pushing average delays to 6–8 days.
  • Red Sea disruptions also continued causing arrival bunching at destination hubs, further slowing yard productivity.

Air Freight Updates

Peak Season Performance

Demand Surge

  • Mixed Demand Across Regions: Airfreight demand picked up slightly post-Ramadan and post-Eid, especially from the Middle East and Southeast Asia. However, overall momentum remained modest across long-haul lanes.
  • Tariff-Driven Shipping Activity: The looming U.S. tariff deadline on select Chinese goods triggered last-minute e-commerce shipments, especially in fashion and consumer electronics.

Capacity Constraints

  • Passenger Flights Add Lift: The return of transatlantic and intra-Asia passenger routes added much-needed belly space, easing short-term pressure on space availability.
  • Equipment Shifts: Some carriers reallocated wide-body aircraft from Asia–Europe lanes to transpacific routes due to persistent ocean freight delays and tariff-sensitive shipments.

Rate Increases

Asia–U.S. West Coast:

  • Spot rates peaked mid-May due to pre-tariff demand, then softened by month-end. Carriers expect renewed pressure in June if tariff extensions continue.

Europe Outbound:

Rates remained firm on automotive and industrial goods out of Germany, France, and Eastern Europe. Increased belly capacity prevented any major month-on-month spike.

Region-Specific Developments

Asia-Pacific

  • Red Sea Impact Continues: Shippers diverted more sensitive and urgent shipments (like electronics and healthcare goods) to air, especially on Asia–EU and Asia–USEC lanes.
  • China Origin Trends: Spot rates from major Chinese hubs held firm due to steady e-commerce volumes and shifting sourcing timelines.

Europe

  • Cargo Holds on Automotive & Aerospace: These sectors continued to drive volume out of Western Europe, with minor delays reported at Frankfurt and Amsterdam due to labor issues.

Disruptions and Delays

Temperature-Sensitive Cargo

  • Minimal Reefer Issues: Perishable air cargo moved steadily in May, with only minor handling issues at Southeast Asia origin points.

Tariff-Driven Volatility

  • Short-Term Booking Spikes: U.S. tariff uncertainty triggered urgent air bookings from Asia, especially in the final 10 days of May.

Technological Advancements

C

AI & Predictive Modeling

  • Airlines and freight platforms continued expanding AI-based planning tools to balance capacity and avoid under- or overbooking, especially on volatile Asia–U.S. lanes.

Drones & Last-Mile

  • Pilot Programs Expand: Drone delivery trials expanded further in Canada and parts of the UAE, with regulatory frameworks expected to support commercial rollouts by late 2025.

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