1. Macro outlook: Growth in global container volumes to slow slightly after record-breaking 2024
Summary:
- Demand to grow by 3% in 2025
- Total demand growth for 2024 to land at 4-5% and break though 180m TEU
- Massive demand growth from China to Mexico expected to continue
- Overall inflation to stay above 2.0% threshold targeted by the European Central Bank and Federal Reserve
Global demand in the first eight months of 2024 was up 6.7% year-on-year, with May and August both surpassing the 16m TEU mark, which had never happened before. (source: CTS)
Xeneta expects total demand growth for 2024 to land at 4-5% and break through 180m TEU, surpassing the all-time high of 179.8m TEU from 2021.
2024 has been a year characterized by shippers’ extensive frontloading of cargo to safeguard supply chains and ensure enough goods were on inventory should even worse disruptions be on the way.
A trade-to-GDP multiplier at 1.6 is the highest since 2011, representing a clear trend-break from the 2012-2023 average of 0.8. This reinforces the suggestion that frontloading of imports was to protect supply chains rather than due to underlying consumer demand. This would suggest lower imports in 2025 as shippers draw down on inventories.
For 2025, Xeneta forecasts a 3% TEU demand growth on a global level.
Back door to the US will remain open in 2025
China to Mexico trade has been in the spotlight in 2024 with TEU-demand growth increasing 22.1% year-to-date compared with 2023. This follows full year-on-year growth of 34.6% in 2023.
One of the key reasons is found in the cooling relations between China and US and Mexico being seen as a backdoor to avoid import tariffs. Looking ahead to 2025, demand is expected to increase further on this trade.
Another one to watch is China to the Middle East where volumes are 52% up from 2021.
Macro-economic outlook
- Euro Area GDP growth set to climb to 1.5% in 2025 from low base of 0.9%, while it is sliding downwards in the US to 1.9% from an expected level of 2.6% in 2024.
- Overall inflation has come down from the peaks of 2022/2023, and more importantly it is now mostly on services rather than goods.
- Overall inflation looks like it will stay above the 2.0% threshold targeted by the European Central Bank and Federal Reserve, so consumers may still struggle to go on buying sprees.
- Wage growth in 2025 is expected at 3.4% for the Euro Area (4.3% in 2024) and 2.5% in the US (2024: 3.2%).
- Don’t pay too much attention to the overall Chinese economy – there is more insight to be gained assessing the economic outlook of nations its containerized goods are being exported to.
Factors which could increase demand in 2025
- Faster decline in US inflation
- Recovering German economy
- Disruption such as natural disaster and geopolitical events
Factors which could adversely impact demand in 2025:
- Retailers normalizing inventories after 2024 frontloading of cargoes
- Geopolitical deterioration / imposing of new sanctions
- Consumers being fearful of the future. including rising unemployment in the US
- Interest rates not cut fast enough in US and Euro Area
“Macro-economic developments set the overall direction for container shipping demand but it does not tell the whole story and shippers need to understand market nuances at a regional and port-to-port level. The upcoming US Presidential elections will have a major influence on 2025 because the potential for new tariffs on Chinese imports could see shippers revisit their manufacturing and supply chain set ups – and perhaps see a further acceleration in imports to Mexico.
“2024 was very much driven by frontloading of cargoes, in addition to longer sailing distances. Any change in this approach next year represents a downward risk to demand – unless 2025 turns out to be even more dramatic.”
Peter Sand
Chief Analyst, Xeneta