The threat of geo-politics and regional disputes on supply chains has been clear and present during 2024 – and these major disruptions are now happening with increasing frequency and severity. Shippers should expect and plan for further turmoil in 2025.

Conflict in Middle East and Red Sea attacks

Conflict between Israel and Hamas has served as the backdrop to Houthi attacks on ships in the Red Sea. There is little prospect of the situation improving in 2025.

This means ocean supply chains will continue to be impacted, not only in respect of long and short term freight rates, but also transit times, capacity restraints and congestion.

Image above shows ships over 8 000 TEU diverting around the Cape of Good Hope on 8 October 2024 (source: Xeneta and Marine Benchmark)

Panama Canal drought

There is better news at the Panama Canal, which has seen restrictions due to drought during 2024. The Gatun Lake water level stood at 86.2 feet on 7 October 2024, which is well above the five-year average for the month. The restrictions which have plagued this vital maritime artery should not be an issue in 2025.

US strike threat

While port strikes on the US East and Gulf Coasts ended after three days, a final agreement has yet to be signed. A new deadline of 15 January has been set to allow further negotiations but with the issue of automation remaining a highly-contention issue, further strike action cannot be ruled out in 2025. This would coincide with pre-Chinese New Year volumes meaning the impact of a strike would still be severe.

Trade tensions and tariffs

The next occupant of the Oval Office will have a big influence on ocean container shipping in 2025. Donald Trump has promised heightened tariffs on Chinese goods (and goods from the rest of the world) should he be the next US President.

Tariff retaliation would then be expected from China should Trump get his way. We are already seeing China diversify its exports to other nations, including some which will be used as a stop to avoid tariffs when eventually moved into the US.

Preparing for the unknown

Other potential flashpoints threaten supply chains in 2025, whether it is regime change in Bangladesh, military action in the Taiwan Strait or even another global pandemic or climate-related incident.

Many shippers have now moved away from just-in-time to just-in-case in their supply chains during 2024, frontloading imports earlier in the year following outbreak of conflict in the Red Sea and threat of strikes on the US Atlantic coasts.

Shippers should move away from freight procurement strategies that focus purely on cost to one which balances getting the lowest possible rate with a higher service level. Using data to position your business at the right level in the market makes it more likely you can work with your carrier or freight forwarder to find a mutually-agreeable solution to protect supply chains when the next black swan event arrives.