MARKET DYNAMICS

​​​​​​Asia's logistics landscape is shaped by strong e-commerce growth, though tempered by regulatory shifts such as the US suspension of de minimis exemptions effective February 4, 2025. US tariff threats, particularly against China, and retaliatory measures drive shipment rushes and cost pressures. Brent crude oil, steady at $74/bbl in December 2024, surged above $80/bbl in early 2025 due to weather disruptions, sanctions, and OPEC+ cuts. Forecasts place it at an average of $74/bbl for 2025, declining to $66/bbl in 2026, impacting freight rates across all modes.

AIR FREIGHT

• Air cargo demand softened in early January but is expected to rebound as companies accelerate shipments ahead of Lunar New Year factory closures and e-commerce growth remains strong.

• Global air cargo capacity increased 6% YoY in January 2025 but remains insufficient to meet resilient demand.

• Freighters have shifted away from Transatlantic routes due to e-commerce and nearshoring trends, while passenger belly capacity increased during the holiday season.

• Capacity constraints persist, keeping air cargo rates elevated. Origins in the Asia-Pacific and Middle East drive global average prices.

OCEAN FREIGHT

• Global container shipping volumes rose by 14.6 million TEU in the first 11 months of 2024 compared to the same period in 2018.

• The global fleet expanded by 10.1% year over year as 2.9 million TEU of new capacity entered service in 2024, surpassing the previous record of 2.3 million TEU in 2023. Since 2019, the fleet has grown by 39% (+8.9 million TEU).

• Returning to normal sailing distances could expose a significant gap between supply and demand growth.

• Global schedule reliability remains challenging, declining to 53.8% in December 2024 (-0.9 percentage points MoM, -3.0 percentage points YoY).

• The average delay for late vessel arrivals improved slightly to 5.28 days, the lowest since July 2024.

LOGISTICS GUIDANCE

• Short-haul shipments require an additional 1–2 weeks of lead time; long-haul shipments require 2–3 weeks.

• A four-week rolling forecast and bookings placed at least 4 weeks in advance are recommended to mitigate disruptions.

COURIER AND GROUND

• Courier freight remains stable but at elevated pricing due to General Rate Increases (GRIs) and fuel costs. DHL removed its "Demand Surcharge" as of February 2025.

• Domestic transportation in China operates normally at the available capacity.

• Intra-Asia cross-border ground transportation, including at the Chinese-Hong Kong and South Asian borders, is functioning normally with sufficient capacity.

DEMAND TRENDS & FORECASTS

AIR FREIGHT

Global air cargo demand softened in January 2025, growing just 2% year-on-year (YoY) after double-digit increases in 2024, reflecting weaker manufacturing export orders and reduced ocean shipping disruptions. A gradual pickup is expected, driven by: 

• Pre-Lunar New Year rushes starting January 28, 2025, in China, Vietnam, and South Korea. 

• Asia's booming e-commerce growth will continue into 2025 despite US tariff threats and stricter regulations, including the de minimis exemption suspension effective February 4, 2025, which may dampen volumes by increasing costs and customs delays. 

• Industry sources maintain a 4-6% growth forecast for 2025 despite concerns about trade wars and potential e-commerce slowdowns.

OCEAN FREIGHT

Global container demand rose by 14.6 million TEU in the first 11 months of 2024 compared to 2018, with no significant slowdown anticipated through Q1 2026. Key trends include: 

• Strong Transpacific Eastbound (TPEB) volumes, per the Shanghai Container Freight Index (SCFI), driven by tariff avoidance rushes. 

• Robust Intra-Asia demand from North East Asia (NEA) to South East Asia (SEA), especially out of China, and SEA-SEA trades, though SEA-NEA into China trends softer. 

• Continued stock replenishment sustains demand utilization across trade lanes.

COURIER

Demand remains consistent through Q1 2026, underpinned by e-commerce strength. However: 

• The suspension of de minimis exemptions by countries, effective February 4, 2025, may dampen demand, particularly on US-bound routes, by increasing costs and adding time-consuming entry filing requirements.

GROUND

Demand stays stable across Q2 2025–Q1 2026, supported by: 

• Unchanged domestic transportation in China is operating normally. 

• Steady Intra-Asia cross-border trade lanes, including China-Hong Kong and China-Vietnam, driven by consistent trade flows.

SUPPLY ANALYSIS

AIR FREIGHT

• Global air cargo capacity increased by 6% YoY in January 2025 but lags resilient demand, particularly from Asia-Pacific and Middle East origins. Key dynamics include:  

• Freighters shifted from Transatlantic routes to e-commerce-heavy lanes, slowing after the peak season, while passenger belly capacity rose during holidays.  

• Supply remains under pressure due to limited capacity additions, with growth expected to decelerate as belly capacity expansion slows and freighters remain scarce. This will maintain high load factors through 2025 and beyond. 

OCEAN FREIGHT

• Capacity increased 10.1% year-over-year (YoY) in 2024, with 2.9 million TEUs delivered, representing a 39% rise from 2019 when 8.9 million TEUs were delivered. For Q2 2025–Q1 2026:  

• Liner capacity growth is expected to slow to 5% (1.5m TEU) in 2025, as top carriers hold 2.6m TEU of vessels over 20 years old, and scrapping is anticipated to increase.  

• An additional 2m TEU could return if Red Sea diversions end, potentially oversupplying the market.  

• Schedule reliability remains at 50%-55%, with December 2024 at 53.8% (down 0.9% M/M, 3% YoY). Delays improved to 5.28 days (the lowest since July 2024) but are still above the 2018-2019 levels. Trade lane specifics:  

• Asia-North Europe: 50.4% reliability (up 3% M/M), delays at 6.17 days.  

• Asia-NA West Coast: 48.3% (down 4.2% M/M), delays at 6.27 days.  

• Asia-NA East Coast: 41.6% (up 7.5% M/M), delays at 5.86 days. 

• The Gemini Cooperation, comprising Maersk and Hapag-Lloyd, effective February 1, 2025, utilizes Singapore as a hub in a hub-and-spoke model, aiming for 90% reliability. 

COURIER 

• Capacities remain available and sufficient across all trade lanes, with no disruptions reported. Channels continue to flow smoothly through Q1 2026. 

GROUND FREIGHT

• Capacities are sufficient, with all channels operating normally:  

• Customs clearance at the Shenzhen-Hong Kong and China-Vietnam borders flows smoothly without disruptions.  

• The competitive landscape is expected to ensure available trucking capacity through Q1 2026. 

PRICING TRENDS & INSIGHTS

AIR FREIGHT

• Global air cargo spot rates declined 11% month-over-month in the four weeks ending January 26, 2025 (compared to 13% a year ago), with seasonal rates down 8%. Rates remain 17% higher YoY and 56% above 2019 levels, driven by:  

• Persistent supply-demand imbalances, originating in the Asia-Pacific and Middle East, leading global averages.  

• Pre-Lunar New Year rushes and the EU's 2% SAF mandate (effective January 2025), which would add surcharges, followed a surge in Brent crude oil to $80/bbl in early 2025 from $74/bbl in December 2024. The forecast for 2025 is $74/bbl, with $66/bbl expected in 2026.  

• Pricing escalates to Red in Q4 2025–Q1 2026 as capacity tightens and fuel costs remain volatile. 

OCEAN FREIGHT

• Rates dropped in early 2025 (SCFI -17%, WCI -12%) despite strong volumes, reflecting increased capacity. Volatility persists due to:  

• Alliance reshuffles (e.g., Gemini Cooperation) and ongoing developments in the Red Sea, with no quick return of capacity expected.  

• Elevated rates on intra-Asia corridors prompt new capacity additions.  

• Pricing shifts from Green to Yellow by Q3 2025, stabilizing moderately through Q1 2026. 

COURIER

• Pricing remains elevated due to fuel costs and prior General Rate Increases (GRIs):  

• The "Demand Surcharge" from September 2024 ceased with DHL effective February 2025, easing pressure.  

• Rates spike to Red in Q1 2026 amid seasonal demand and regulatory cost increases, following a Yellow period in Q3–Q4 2025. Courier rates are projected to spike to Red in Q1 2026, primarily driven by the traditional yearly General Rate Increase (GRI) and GRIGPI adjustments implemented by carriers. Seasonal demand, particularly around the Lunar New Year, early-year shipping surges, and rising regulatory costs (e.g., compliance with environmental standards and trade policies) will further amplify this increase. 

GROUND FREIGHT

• Rates remain steady and competitive, reflecting:  

• Sufficient capacity and a balanced supply-demand dynamic.  

• No significant shifts are anticipated, maintaining moderate pressure (Yellow) through Q1 2026.

KEY TAKEAWAYS

The logistics market in Asia faces a mix of opportunities and challenges this quarter. Air cargo demand has softened but is expected to recover, with supply-demand imbalances likely to keep rates elevated. Ocean freight is experiencing disruptions due to new shipping alliances and capacity shifts, requiring proactive procurement strategies. Sustainability and digitalization continue to shape logistics, with fuel-efficient fleets, AI-driven forecasting, and blockchain-based customs processing gaining traction. Procurement professionals should book early, diversify carrier options, and monitor regulatory changes to mitigate risks and optimize costs. 

AIR FREIGHT

Procurement Actions: Secure capacity 4-6 weeks in advance for Q4 2025–Q1 2026 to avoid rate spikes resulting from seasonal demand and capacity constraints. 
Emerging Trends:

• Sustainability: EU Sustainable Aviation Fuel (SAF) mandates will drive up costs and prioritize fuel-efficient carriers. 

• Digitalization: AI-based forecasting tools can enhance capacity planning and track the adoption of major carriers. 

Market Insights:

• Air cargo demand declined in early 2025 after experiencing strong growth in 2024 but is expected to recover. 

• Slowing manufacturing exports and tighter e-commerce regulations may temper demand. 

• Despite trade uncertainties, global air cargo is still projected to grow 4-6% in 2025. 

• Capacity grew 6% YoY in January, but supply lags behind demand, sustaining elevated rates. 

• Brent crude oil prices fluctuated from $74/bbl (Dec ’24) to $80/bbl (early 2025) but are expected to stabilize. 

OCEAN FREIGHT

Procurement Actions: Extend lead times (1-2 weeks for short-haul, 2-3 weeks for long-haul). Provide 4-week rolling forecasts and book at least 4 weeks in advance. 
Emerging Trends: 

• Sustainability: The Gemini Cooperation’s hub-and-spoke model aims to lower emissions—and favor carriers with green initiatives. 

• Digitalization: Blockchain-enabled customs clearance could streamline Asia-North Europe trade—track pilot implementations. 

Market Insights: 

• Despite easing port strike threats, capacity cuts continue due to service reshuffles, blank sailings, and tariff uncertainties. 

• The new Gemini Cooperation (Maersk and Hapag-Lloyd) restructures shipping routes, with Singapore as a key hub, to enhance schedule reliability. 

• Asia-North Europe trade is expected to face an 11% capacity reduction, while Asia-Mediterranean trade is projected to see a 5% increase. 

• The dissolution of major vessel-sharing agreements (VSAs) reshapes alliances, impacting trade flows. 

COURIER

• Lock in Q1 2026 rates early to mitigate seasonal surcharges. 

• Monitor de minimis changes affecting cross-border e-commerce costs. 

• AI-driven last-mile routing could improve delivery efficiency by engaging carriers to adopt these innovations. 

GROUND FREIGHT

• Maintain existing contracts but negotiate flexibility for potential volume surges in Q1 2026. 

• The electrification of truck fleets could offer long-term cost savings—evaluating carriers that invest in green technologies. 

MARKET OVERVIEW

The global economy in early 2025 is characterized by moderate growth and persistently high inflation, compounded by supply chain disruptions and geopolitical tensions. Central banks, including the European Central Bank (ECB), balance stimulating growth and controlling inflation. U.S. President Trump’s tariff policies since January 2025 threaten to reshape global trade dynamics. 

These factors, alongside regional instabilities in the Middle East and Ukraine, create a complex backdrop for European logistics, with potential tariff wars and trade imbalances adding further uncertainty.  

The global economy is experiencing moderate growth and high inflation while grappling with supply chain issues and geopolitical uncertainties. Central banks are carefully balancing the need to foster economic growth with the necessity of controlling inflation. Inflation rates remain high across many regions, driven by supply chain disruptions and elevated energy prices.  

In January 2025, the European Vice President of the European Central Bank stated, “Today, the euro area is in a quite different place. Having cut interest rates four times since last June by one hundred basis points, we have made substantial progress in bringing inflation back to target. At the same time, the balance of macroeconomic risks has shifted from concerns about high inflation to concerns about low growth. The outlook is clouded by even higher uncertainty, driven by potential global trade frictions, macroeconomic fragmentation, geopolitical tensions, and fiscal policy concerns in the euro area.”  

Since taking office in late January, President Trump has implemented extensive tariffs to protect American industries, generate revenue, and serve as a strategic bargaining tool. The extent of his actions remains uncertain, but if current proposals are fully implemented, average tariffs could reach their highest levels since the 1940s, marking a significant shift in global trade dynamics. Since the end of World War II, tariffs have been widely viewed as causing higher consumer prices, reducing choices, and, due to inevitable retaliation, ultimately harming the industries they were intended to protect. The U.S. is running a significant trade deficit. In 2024, the goods trade deficit hit a record $1.2 trillion, showing that the rest of the world is generating substantial revenue by selling to the U.S. market. The danger of this policy is that it will take time to build up the U.S. industry, leaving consumers to face higher prices in the interim.  

A study on Trump’s 2018 tariffs on China revealed that importers and distributors absorbed most cost increases during the first two years, sparing consumers from immediate price hikes. However, price increases tend to emerge gradually—once tariffs are seen as permanent, manufacturers recognize that costs must be shared, prompting them to raise prices over time. Trump’s current stance targets China, Mexico, and Canada but could soon extend to the EU. He recently stated, “They do not take our cars, they do not take our farm products, they take almost nothing, and we take everything from them. Millions of cars, tremendous amounts of food and farm products.”  

The risk of a global tariff war has escalated in recent months. The EU raised tariffs on Chinese electric vehicle (EV) imports due to concerns over Chinese government subsidies. This prompted China to launch an anti-dumping investigation into EU brandy imports and examine pork and dairy imports from the bloc. The Middle East remains volatile, though a fragile ceasefire is in place. President Trump seems committed to resolving the conflict in Ukraine, but the two sides appear far from an acceptable solution.  

DEMAND TRENDS & FORECASTS

Demand across European logistics sectors—air freight, ocean freight, courier, and road freight—is poised for varied growth from Q2 2025 to Q1 2026, driven by e-commerce, economic recovery, and shifting trade patterns. The air and courier sectors benefit from robust online shopping trends, while ocean freight faces congestion from late 2024 volumes. Road freight shows modest recovery amid capacity constraints, with forecasts reflecting seasonal peaks and geopolitical influences like Middle East stability and Red Sea transit resumption.  

AIR FREIGHT

• Data from air freight analyst Rotate shows that volumes from Asia to Europe increased by 9% week-over-week in Week Four and are 17% higher than a year ago. There was a slowdown in e-commerce demand in the first week of January, but it has since rebounded on both the China-Europe and China-U.S. routes.

• President Trump signed an executive action suspending access to the Section 321 customs de minimis entry process, effective February 4, 2025, which would have meant shipments valued under $800 (such as e-commerce retail shipments) would no longer be duty-free and subject to tariffs. However, the White House added a sentence pausing the ban, stating it will only take effect “upon notification by the secretary of commerce to the president that adequate systems are in place to fully and expediently process and collect tariff revenue.” E-commerce players are adapting by storing products in U.S. warehouses, shifting manufacturing to countries like Brazil, Turkey, India, Vietnam, and Mexico, and seeking local U.S. manufacturers.

• In Europe, the European Commission urges lawmakers to phase out the €150 customs duty exemption, with stricter controls on parcels from China (e.g., Shein, Temu) targeting “dangerous products.” If a peace deal between Israel and Hamas is signed, some volumes may shift from air to ocean transport, though this remains uncertain and should not be relied upon yet. Such a shift could soften demand, free capacity, and potentially lower prices.  

• Forecast:  

  • Q2 2025: Steady e-commerce-driven demand; Asia-Europe volumes sustain 17% YoY growth.  

  • Q3 2025: Potential softening if Middle East peace shifts volumes to ocean freight.  

  • Q3 2025: Potential softening if Middle East peace shifts volumes to ocean freight.  

  • Q4 2025: Peak season surge from holiday e-commerce demand.  

  • Q1 2026: Post-peak slowdown; possible capacity relief if the Red Sea stabilizes. 

OCEAN FREIGHT

Substantial export volumes from China in December 2024 (835,000 TEUs, +17.6% YoY per Container Trade Statistics) are still arriving at European ports, worsening congestion from winter storms and labor strikes at hubs in France and the Netherlands. These volumes, recorded at export, began hitting Europe in late January and continued into February.  

• Forecast:  

  • Q2 2025: Congestion persists from December exports; weather and strikes disrupt schedules.  

  • Q3 2025: Gradual Suez Canal resumption possible, though caution prevails.  

  • Q4 2025: High volumes are expected; capacity constraints will be eased if Suez reopens fully.  

  • Q1 2026: Stabilization as new alliances mature; lower demand post-holidays. 

COURIER

An Effigy Consulting study of 500,000 data points across 41 countries shows growth driven by e-commerce, with nearly 70% (4.2 billion) of shipments expected to go directly to consumers. The peak season (Black Friday and holidays) is critical for European retailers and manufacturers. Factors driving growth include rising online shopping, urban delivery needs, technological innovations (e.g., automated sorting, drones), and increasing cross-border shipping demands, especially for SMEs entering new markets.  

• Forecast:  

  • Q2 2025: E-commerce sustains 70% of shipments; cross-border demand rises.  

  • Q3 2025: Growth continues with urban delivery and tech advancements.  

  • Q4 2025: Peak season pushes volumes to 4.2 billion shipments.  

  • Q1 2026: Steady growth as SMEs expand internationally. 

GROUND

The sector grew by 0.9% to €428.2 billion in 2024. Weak demand is reflected in German truck mileage, down 3% in 2023 and 0.7% through October 2024. As Europe’s leading economy and transit hub, Germany indicates broader trends. Though slower than expected, a predicted economic improvement in 2025 suggests rising activity. Quarter-over-quarter demand recovered from a sluggish Q3 2024, with retail trade volumes up 3.8% pre-holidays. Transport Intelligence forecasts a 2% increase in 2025, reaching €436.9 billion.  

• Forecast:  

  • Q2 2025: Weak demand lingers; slow recovery begins.  

  • Q3 2025: Economic uptick boosts activity; retail volumes sustain growth.  

  • Q4 2025: Modest 2% YoY growth to €436.9 billion.  

  • Q1 2026: Sustained recovery, though constrained by capacity limits. 

SUPPLY ANALYSIS

Supply dynamics in European logistics from Q2 2025 to Q1 2026 reveal a mix of constraints and expansions across sectors. Air freight contends with post-peak capacity drops and delivery delays, while ocean freight navigates alliance transitions and Red Sea avoidance. Courier services bolster capacity with significant investments and road freight struggles with limited new entries and driver shortages, shaping a complex supply landscape influenced by seasonal and geopolitical factors.  

AIR FREIGHT

Freighter capacity dropped 26% from early December to early January post-peak season. Airbus and Boeing’s 2024 backlog includes over 14,000 delayed aircraft deliveries. Delayed A380 retirements add cargo capacity. 

Full-year 2024 capacity (ACTK) rose 7.4% YoY (9.6% internationally), with December demand up 6.1% (7.0% internationally) and capacity up 3.7% (5.2% internationally). Air cargo demand grew 11.3% in 2024, driven by e-commerce and ocean restrictions, with high yields (6.6% above December 2023, 53.4% above 2019).  

• Forecast:  

  • Q2 2025: Capacity stabilizes post-26% drop; backlog delays persist.  

  • Q3 2025: Modest growth (7.4% ACTK YoY); A380 delays help.  

  • Q4 2025: Peak season strains capacity; yields stay high.  

  • Q1 2026: Possible easing if ocean shifts occur; SAF mandate adds costs. 

OCEAN SUPPLY 

Xeneta reports 19 blank sailings (297,816 TEUs) on Asia-to-Europe and 14 (186,829 TEUs) on Asia-to-Mediterranean trades for Weeks 5-16. Extreme weather from January 23 disrupted Western European ports, suspending cargo handling. Effective February 1, 2025, new alliances include the Gemini Cooperation (Maersk/Hapag-Lloyd), with 340 vessels phasing in by late May and fully operational by June. 

The Ocean Alliance is expected to dominate post-2025. Despite a ceasefire, carriers avoid the Red Sea, routing via the Cape of Good Hope. If conditions stabilize, a phased Suez return is possible in 1-2 months. Schedule reliability hit 54.8% in November 2024, with delays at 5.41 days.  

• Forecast:  

  • Q2 2025: Blank sailings and Gemini transition begin; Red Sea avoidance continues.  

  • Q3 2025: Gemini ramps up; cautious Suez use grows.  

  • Q4 2025: Full Gemini operations; Suez use increases.  

  • Q1 2026: Schedules normalize post-Red Sea return; Ocean Alliance leads. 

COURIER SUPPLY 
Europe’s e-commerce market revenue is projected at $707.90 billion in 2025, growing at a 7.95% CAGR through 2029. DHL Express is investing over €100 million for the Q4 2025 peak season, deploying eight new Boeing 777 freighters. FedEx is investing €30 million in a heavy cargo hub in Paris, while UPS Healthcare is opening facilities in Milan and Frankfurt. Growth of 8.8% in 2024 drives volume, with B2B shipments recovering gradually.  

• Forecast:  

  • Q2 2025: DHL and FedEx expansions target peak season prep.  

  • Q3 2025: UPS hubs and tech (e.g., drones) boost efficiency.  

  • Q4 2025: Capacity meets 4.2 billion shipment peak.  

  • Q1 2026: Cross-border capacity grows; 7.95% CAGR sustains. 

ROAD FREIGHT SUPPLY 

New capacity is limited, with HGV registrations down 29% in Q3 2024 per ACEA. Rising costs and declining revenues strain transport firms, with bankruptcies up (e.g., France +37.8%, Belgium +50%). Poland faces 30,000 unfilled driver positions, impacting its 7% GDP contribution from transport.   

• Forecast:   

  • Q2 2025: HGV drop and bankruptcies limit capacity.   

  • Q3 2025: Driver shortages persist; slow growth begins.   

  • Q4 2025: Modest capacity rise despite 2% market growth.   

  • Q1 2026: Stabilization, though labor constraints linger. 

PRICING TRENDS & INSIGHTS

Pricing trends from Q2 2025 to Q1 2026 reflect a post-peak softening in air and ocean freight rates, though both remain elevated compared to 2024, driven by e-commerce and capacity dynamics. Courier pricing faces upward pressure from general rate increases (GRIs) and surcharges, while road freight sees rising contract rates offset by falling diesel costs, with new compliance costs looming. Seasonal peaks, regulatory changes, and trade uncertainties shape these forecasts.  

AIR FREIGHT 

• Global spot rates dropped 11% MoM to $2.71/kg by January 26, 2025, with seasonal rates at $2.39/kg. Asia-Europe rates fell 4% to $4.35/kg in Week 3, down 15% from Week 49 but up 31% YoY. Rates remain 20% above January 2024. Airlines will likely increase block space agreements (BSAs) in 2025, while freight forwarders face tender challenges from Q4 2024 disparities (50% short-term buys, 90% long-term sales). A 2% SAF mandate adds $0.03/kg from January 1, 2025.  

• As the peak season concludes, the global air cargo market transitions into its usual low season, with spot rates cooling down. In the four weeks ending January 26, the international air cargo spot rate dropped by 11% month-on-month to USD 2.71 per kg, while the seasonal rate declined by 8% to USD 2.39 per kg. The higher spot rate than the seasonal rate indicates that market sentiment remains heated. 

• Air cargo rates on the trans-Pacific and Asia-Europe trades have softened through January after the highs of early December, even though volumes on these corridors continue to grow. 

• In February, despite worries that the market might be affected by new US tariffs on China, the temporary halt of the de minimis ban, and the slowdown of the Lunar New Year, airfreight rates have stayed steady over the past weeks. 

• Data from air freight analyst Rotate shows that volume from Asia to Europe is up 9% weekly and 17% higher than a year ago. 

• Spot rates from Asia to Europe fell 4% sequentially in week three to an average of $4.35 per kg and are down 15% compared with $5.14 in week forty-nine. However, the most recent rates are up 31% year-over-year, according to data from World ACD.

• In the near term, airlines are expected to begin 2025 in a stronger position than last year, as global air cargo spot rates in January remained nearly 20% higher than 12 months ago. Airlines will likely increase their block space agreements (BSAs) in response to anticipated supply-demand imbalances in 2025. 

• Consequently, freight forwarders will face challenging tender negotiations due to limited benefits from the e-commerce boom and its eroded margins. In Q4 2024, they purchased nearly 50% of cargo capacity at short-term market rates but sold over 90% through long-term contracts. This disparity is likely for eight forwarders to raise their long-term selling rates to shippers. 

• As of January 1, 2025, all aircraft departures from European Union (EU) countries and the UK must comply with a 2% Sustainable Aviation Fuel (SAF) blending mandate, which adds approximately $0.03/kg to the overall price. 

• Freight buyers have stronger negotiating power when the dynamic load factor is below 80%, but their leverage diminishes when it exceeds 80%. Additionally, shippers gain a negotiating advantage when the difference between the weight load factor and the volume load factor works in their favor. For example, a shipper transporting heavy machinery with less belly hold space is more likely to secure a discount than shipping cargo with high volumetric weight. 

• Forecast:  

  • Q2 2025: Rates cool to $2.71/kg; Asia-Europe at $4.35/kg.  

  • Q3 2025: Steady rates; SAF costs persist.  

  • Q4 2025: Peak season spikes; BSAs rise.  

  • Q1 2026: Post-peak decline; ocean shifts may soften rates. 

OCEAN FREIGHT PRICING 

• Spot rates from the Far East to North Europe fell 16.9% to $4,175/FEU by January 22, 2025, and to $5,400/FEU for the Mediterranean (down 7.2%). By February 13, Drewry reported Shanghai-Genoa at $4,163 (down 2%) and Shanghai-Rotterdam at $2,887 (down 8%). Carriers offer discounts for contracts over six months amid Red Sea uncertainty.   

• Spot rates from the Far East to Europe dropped at the beginning of the year following six weeks of increases at the end of 2024. Since December 31, the average spot rate from the Far East to North Europe has decreased by 16.9% to USD 4,175 per FEU as of January 22 and 7.2% to USD 5,400 for the Mediterranean. 

• As of February 13, the Drewry Freight Index reported that Shanghai to Genoa decreased 2% to $4,163 and Freight rates from Shanghai to Rotterdam decreased 8%, or $238, to $2,887 per 40-ft container. 

• Due to the uncertainty surrounding the resumption of Red Sea transits, this is impacting long-term rate deals between Asia and North Europe. Carriers offer significant discounts to shippers who agree to contracts over six months. Data indicates that Asia-North Europe spot rates have nearly halved since the beginning of the year. Sellers are trying to encourage longer-term agreements to manage risk and maintain market share, while buyers are striving to keep their options open and minimize expenses. Historically, Asia-to-Europe contract rates ran from January to December, but many shippers have delayed and extended their 2024 pricing.

• Forecast:  

  • Q2 2025: Rates drop to $4,175/FEU; long-term deals discounted.  

  • Q3 2025: Rates stabilize as Suez use grows.  

  • Q4 2025: Holiday demand pushes rates; capacity flood possible.  

  • Q1 2026: Rates ease; carriers lock-in contracts. 

COURIER PRICING 

• GRIs of 5.9% in 2025 reflect real increases of 6.3% for UPS and 7.0% for FedEx. Demand surcharges from late 2024 persist into 2025 for European shipments, alongside zone fees and surcharges impacting budgets.  

• Unsurprisingly, GRIs are not the only extra costs shippers will encounter. They are simply the most apparent way carriers boost their revenue per package. Other factors not listed on rate cards, such as new rules and fees related to zones, package dimensions, and ever-changing surcharges, will significantly impact shipping budgets, particularly affecting some shipping profiles. 

COURIER PRICING 

• GRIs of 5.9% in 2025 reflect real increases of 6.3% for UPS and 7.0% for FedEx. Demand surcharges from late 2024 persist into 2025 for European shipments, alongside zone fees and surcharges impacting budgets.  

• Unsurprisingly, GRIs are not the only extra costs shippers will encounter. They are simply the most apparent way carriers boost their revenue per package. Other factors not listed on rate cards, such as new rules and fees related to zones, package dimensions, and ever-changing surcharges, will significantly impact shipping budgets, particularly affecting some shipping profiles. 

• So, what can FedEx and UPS shippers expect in 2025? An analysis of the 2025 GRIs, which includes the actual surcharges and the new rules, fees, and surcharges now in effect, provides a year-over-year comparison of real-world costs and some surprising findings. 

• This year’s 5.9% GRIs will more accurately reflect the increases many shippers experience. Our analysis shows that UPS customers shipping the same items as last year will see their costs rise by an average of 6.3%, while FedEx customers making the same shipments will see their actual costs increase by 7.0%. 

• The demand surcharge introduced by FedEx, DHL Express, and UPS in late 2024, which was supposed to be removed at the end of January, has been kept in place for shipments originating from and delivered to European customers by FedEx and UPS. 

• Forecast:  

  • Q2 2025: GRIs rise 5.9%; surcharges linger.  

  • Q3 2025: Zone fees and tech offset some costs.  

  • Q4 2025: Peak surcharges; revenue hits $707.9 billion.  

  • Q1 2026: Costs stabilize; cross-border sustains pressure. 

ROAD FREIGHT PRICING 

• Contract rates rose 2.8 points QoQ to 128.9 in Q4 2024, while spot rates edged up 0.5 points to 123.9. Diesel fell 11.7% to €1,545.06, but labor costs rose 5% YoY. ICS2 compliance from April 2025 adds costs.  

• The capacity index slightly decreased to 97.2 compared to the previous quarter, while the diesel price dropped to €1,545.06. In January, the capacity index was 95.4, with the diesel price at €1,621.15. 

• The European Road Freight Capacity Index shows a year-on-year decrease of 5% compared to last year. 

• Release 3 – 01 April 2025 – Maritime / Road / Rail: The most notable change with ICS2 - Release 2 is that pre-arrival security filing messages must be submitted to European Country Customs Authorities in a much more detailed manner, including a complete Entry Summary Declaration (ENS). The shipment security filing cannot be submitted on time without a detailed goods description per commodity (at the line-item level) and the respected System (HS) code. Although ACS2 is now familiar in other transport modes, it may be more challenging to introduce it in road freight, where consignments are often finalized at the last minute. Complying with this new regulation is likely to add costs. 

• European Road Freight Rates Index: Rate development reversed from last quarter’s decline, with both contract and spot rates rising in Q4 2024. Contract rates increased by 2.8 points quarter-over-quarter to 128.9 but fell by 1.4 points year-over-year. Spot rates edged up increased points quarter-over-quarter to 123.9, down by 1.0 points year-over-year. Contract rates remained above spot rates. 

• Spot rates have remained stable, increasing slightly by 0.5 points quarter-over-quarter to 123.9. Year-over-year, spot rates have decreased by 1.0 points. The gap between spot and contract rates is widening, with contract rates rising faster than spot rates. The spot index first fell below contract rates in Q2 2023 and has stayed below the contract index for seven consecutive quarters. The gap is 5.0 index points, slightly smaller than the 5.4 index points a year ago. 

• In Q4 2024, costs rose across all components except diesel, which fell by 11.7%. Labor costs in the EU27 increased by 5% year-over-year, with driver wages being the fastest-growing cost component. 

• Forecast:   

  • Q2 2025: Contract at 128.9, spot at 123.9; diesel aids margins.   

  • Q3 2025: Labor costs rise; ICS2 impacts budgets.   

  • Q4 2025: Modest rate increases; compliance costs hit.   

  • Q1 2026: Stable pricing; contract-spot gap persists. 

KEY TAKEAWAYS

The outlook for European logistics from Q2 2025 to Q1 2026 is shaped by uncertainties around Red Sea transits, U.S. tariff policies, and robust e-commerce growth. Capacity constraints and pricing pressures persist across sectors, with carriers and shippers adapting to geopolitical and economic shifts. Key uncertainties include the timing of the Suez Canal resumption, the scope of U.S. protectionism, and their combined impact on trade flows and costs. 

• Global Trade Uncertainty: Growing uncertainty over the return to Red Sea transits and the impact of U.S. import tariffs on global trade flows clouds the outlook for 2025.   

• Asia-Europe Route Predictions: Shippers on the ocean route base their views on predictions about when diversions around southern Africa will end. Analysts generally expect a return to Red Sea transits in the latter half of 2025, though the volatile Israel-Hamas conflict adds uncertainty.   

• Carrier Caution on the Red Sea: Carriers have stated they will resume using the Red Sea and Suez Canal only when deemed safe, continuing to divert vessels around Africa despite assurances from Hamas-supporting Houthi militants that they will target only Israel-affiliated ships following the January ceasefire in Gaza.   

• Capacity Flood Post-Suez: The prevailing view is that once Red Sea voyages resume, the market will face a capacity flood as operations ramp up in the Suez. Ports will be congested by vessels arriving simultaneously from both Africa and Canal routes, though this will be temporary until schedules realign.   

• Shift from Air to Ocean: Once the Suez is open and efficient, some shippers using air freight may revert to ocean routes, freeing up air capacity.  

• U.S. Protectionism Impact: The biggest unknown is how U.S. protectionist measures will affect world trade and the flow of goods globally.   

• Red Sea Uncertainty: Carriers avoid the Red Sea despite a ceasefire, with a potential Suez return in late 2025, possibly flooding capacity and disrupting schedules; shippers expect stabilization 1-2 months post-return, though congestion risks remain.   

• U.S. Tariff Impact: Trump’s tariffs, potentially extending to the EU, could raise costs and reshape trade flows, with gradual price hikes likely, as seen in 2018; retaliatory measures (e.g., EU vs. China) escalate global trade tensions.   

• E-Commerce Growth: Driving air and courier demand (4.2 billion shipments in Q4 2025), e-commerce adapts to tariffs via new manufacturing hubs and stricter EU customs rules.   

• Capacity Constraints: Air and road freight face supply limits (e.g., a 26% drop in freighters and a 29% decline in HGVs), while ocean transitions (Gemini Alliance) and courier investments (DHL, FedEx) bolster capacity.   

• Pricing Pressures: Air and ocean rates soften post-peak but remain above 2024 levels; courier GRIs and road labor costs push budgets higher. 

MARKET OVERVIEW

Through Q1 2026, the Americas Logistics sector will navigate a complex landscape marked by robust Air and ocean freight demand tempered by capacity constraints and geopolitical uncertainties. This will set the stage for a gradual stabilization by early 2026. 

• Air freight, currently riding a wave of 6.1% YoY CTK growth against a 3.7% capacity increase, will face tight supply and elevated rates (up 20% YoY) through Q3 2025’s peak season, with relief emerging in Q1 2026 as additional freighter capacity eases load factors from 52.5% to a more balanced level. 

• Ocean freight, buoyed by a 5% fleet expansion, will experience short-term disruptions from Red Sea route adjustments and alliance shifts (e.g., Maersk/Hapag-Lloyd’s Gemini Alliance versus MSC’s solo operations). Lead times will stretch to 40 days in Q2 2025 before stabilizing by Q1 2026. 

• Express/courier services will see FedEx capitalize on freight demand amidst UPS and DHL’s margin-driven stability. In contrast, ground freight, down 8.2% YoY in demand, will tighten capacity through mid-2025 before aligning supply and demand by Q1 2026. U.S. tariff policies under Trump, Asia-to-North America trade surges, and labor shortages will remain pivotal, driving procurement teams to secure contracts and buffer inventories to weather volatility.

The market overview for this quarter highlights a logistics sector in transition during Q3 2024. Air freight demand surged 6.1% YoY (CTK growth), driven by e-commerce expansion and tariff concerns, while ocean freight bookings hit record highs as companies stockpiled ahead of expected tariffs. Express and courier services showed mixed performance—UPS and FedEx gained market share, while DHL lagged. 

Meanwhile, ground freight demand fell 8.2% YoY, reflecting shifting supply chain dynamics. Capacity struggled to keep pace, with air freight capacity rising modestly (3.7%), ocean fleet growth constrained by alliance restructuring, and ground freight capacity tightening due to increased private fleet hiring.

Over the past 12 weeks, tariff threats and USPS volume shifts have jolted the market, setting a trajectory of high demand and constrained supply into Q2 2025. This trajectory is influenced by economic uncertainty, geographic trade imbalances, and technological bottlenecks.

Category Demand Specifics 

• Air Freight: International CTK is up 6.1% year over year (17 months of growth) and will peak in Q3 2024 due to e-commerce and tariff-driven urgency. 

• Ocean Freight: Global bookings hit record highs from Q4 2024 to January 2025, especially on Asia-to-North America routes, reflecting pre-tariff stockpiling. 

• Express/Courier: FedEx was up 5.5% quarter-over-quarter (QoQ) in November 2024; UPS was up 21.3% in December 2024 from USPS volume; and DHL was down 6.3% QoQ in Q4 2024.

• Ground Freight: Case Shipments Index down 8.2% YoY in January 2025, signaling declining demand.

Category Supply and Capacity Specifics 

• Air Freight: Capacity up 3.7% YoY in December 2024, with load factor at 52.5% globally and 51.5% in North America. 

• Ocean Freight: A 5% fleet capacity increase is planned for 2025, tempered by the reintroduction of the Red Sea route and alliance shifts. 

• Express/Courier: FedEx adds freight flights; UPS capacity remains flat for 2025. 

• Ground Freight: Private fleets reduce market capacity by hiring truckers.

Supplier Landscape and Individual Supplier Specifics 

• Air Freight: Major airlines (e.g., Delta, United) target higher rates, and forwarders like DSV face capacity squeezes. 

• Ocean Freight: Maersk/Hapag-Lloyd’s Gemini Alliance boosts reliability; MSC’s solo shift may reduce service quality. 

• Express/Courier: UPS and DHL focus on margins; FedEx targets heavyweight freight. 

• Ground Freight: Providers like JB Hunt and Schneider see capacity tighten as private fleets grow.

Significant Changes (Past 12 Weeks, Q4 2024) 

• Trump tariff threats spiked ocean and air demand in November–December 2024. 

• UPS gained USPS volume, boosting Q4 express demand. 

• Ground freight capacity continued to shrink due to private fleet hiring.

Active Forces/Factors 

• Economic: U.S. tariff uncertainty drives short-term demand spikes. 

• Geographic: Asia-to-North America lanes dominate growth. 

• End Market: E-commerce and retail fuel-air and ocean surges. 

• Technology: Automation in courier sorting lags, straining capacity.

DEMAND TRENDS & FORECASTS

The quarter highlights robust demand in air freight (6.1% YoY CTK growth) driven by e-commerce and tariff urgency, alongside record ocean freight bookings from Asia to North America. 

In comparison, the demand for express/courier varies (UPS up 21.3%, DHL down 6.3%), and ground freight weakens (8.2% YoY drop). Customer preferences lean toward sAird in Air, cost in Ocean, and reliability in Courier, with purchasing behavior shifting to long-term contracts to hedge volatility. Market sizes range from $100B (Courier) to $200B (Ocean), with growth projected at 3-5% through Q2 2025, though price sensitivity and supply chain optimization remain critical for managing peak seasons and tariff impacts, guiding procurement strategies for inventory and capacity planning. 

AIR FREIGHT

• Customer Preferences: Speed prioritized; e-commerce drives 70% of demand. 

• Purchasing Behavior: Shippers favor 12-month contracts to hedge rates. 

• Overall Demand Trends: CTK is up 6.1% YoY, the strongest in 17 months. 

• Market Size and Growth: $150B market, 5% YoY growth projected through Q2 2025. 

• Market Segmentation: Asia-NA (40%), Europe-NA (25%), SMEs air to air (15% uptick). 

• Price Sensitivity: High elasticity; 20% rate hikes risk 10% volume loss. 

• Supply Chain Optimization: Pre-book capacity 4-6 weeks pre-peak. 

• Forecasting and Planning: Demand peaks Q3-Q4 2025; plan for a 10% capacity shortfall. 

• International CTK increased 6.1% year over year, marking 17 straight months of increases. This is the highest demand level the industry has seen. 

OCEAN FREIGHT

• Customer Preferences: Cost over speed; reliability key (Gemini Alliance focus). 

• Purchasing Behavior: Pre-tariff bookings up 30% in Q4 2024. 

• Overall Demand Trends: Record bookings Asia-NA through Jan 2025. 

• Market Size and Growth: $200B market, 4% growth in 2025. 

• Market Segmentation: Asia-NA (50%), retail/end-user dominant. 

• Price Sensitivity: Moderate; $500/FEU hikes manageable. 

• Supply Chain Optimization: Buffer inventory 20% pre-Q3 peak. 

• Forecasting and Planning: Tariff-driven spikes into Q2 2025; stabilize Q1 2026.

EXPRESS/COURIER

• Customer Preferences: Reliability (UPS/DHL) vs. capacity (FedEx freight). 

• Purchasing Behavior: SMEs shift to FedEx for bulk; 5% volume growth. 

• Overall Demand Trends: UPS up 21.3% QoQ, FedEx 5.5%, DHL down 6.3%. 

• Market Size and Growth: $100B market, 3% growth through Q2 2025. 

• Market Segmentation: E-commerce (60%), heavy freight up 10%. 

• Price Sensitivity: Low for express; GRIs absorbed. 

• Supply Chain Optimization: Align with FedEx freight for Q4. 

• Forecasting and Planning: Holiday surge Q4 2025; flat Q2 growth. 

GROUND FREIGHT

• Customer Preferences: Cost-driven; private fleets gain favor. 

• Purchasing Behavior: Long-term contracts sought amidst an 8.2% demand drop. 

• Overall Demand Trends: Case Shipments Index down 8.2% YoY (Jan 2025). 

• Market Size and Growth: $120B market, flat in 2025. 

• Market Segmentation: Retail (40%), manufacturing (30%), regional focus. 

• Price Sensitivity: High; 5% rate hikes shift 15% to private fleets. 

• Supply Chain Optimization: Maintain 10% excess capacity. 

• Forecasting and Planning: Stabilization by Q2 2025; plan conservative volume. 

International CTK increased 6.1% year over year, marking 17 straight months of increases. This is the highest demand level the industry has seen.

SUPPLY ANALYSIS

Supply conditions in the Americas Logistics from Q3 2024 to Q2 2025 are marked by capacity growth struggling to match demand.

• Air freight is up 3.7% YoY yet faces tight lead times (5-7 days) due to a 52.5% load factor, and Ocean freight anticipates a 5% fleet increase in 2025, disrupted by Red Sea transitions and alliance reorganizations.

• Express/courier supply varies—FedEx boosts freight capacity while UPS stays flat—while ground freight sees ongoing capacity erosion from private fleet hiring, with 3-5 day lead times.

Influenced by e-commerce growth, tariff pressures, and supplier shifts, these dynamics suggest a tight supply landscape this quarter, with opportunities to leverage new capacity and risks from geopolitical and labor constraints.

AIR FREIGHT

• Category Supply and Lead Time Specifics: Capacity up 3.7% YoY (Dec 2024); freighters up 3.8% YoY; NA exports up 5.4% YoY; lead times tight at 5-7 days due to 52.5% load factor.

• Change Factors: E-commerce growth, tariff urgency strain capacity; new freighter routes ease pressure.

• Forecast Rationale: Tight supply through Q2 2025, easing by Q1 2026 with capacity additions.

• Supplier Spotlight: Delta Air Lines adds freighters; DSV reports a 10% lead time increase.

• Risks: Geopolitical disruptions (e.g., Middle East tensions) could delay flights.

OCEAN FREIGHT

• Category Supply and Lead Time Specifics: 5% fleet increase in 2025; Red Sea reintroduction and Gemini Alliance (Maersk/Hapag-Lloyd) vs. MSC solo shift disrupt schedules; lead times 30-40 days.

• Change Factors: Alliance reorganization spreads capacity thinly; Red Sea cuts transit times if stable.

• Forecast Rationale: Temporary capacity dip in Q2 2025, stabilizing by Q4 with Red Sea gains.

• Risks: Suez Canal instability or alliance delays could extend lead times.

• Cost Structures: Fuel costs are up 5% YoY, and labor is stable.

EXPRESS/COURIER

• Category Supply and Lead Time Specifics: UPS flat capacity, FedEx adds freight flights; lead times 1-3 days domestic, 5-7 days international.

• Change Factors: FedEx capacity boost offsets UPS/DHL margin focus.

• Forecast Rationale: Stable supply through Q2 2025, holiday strain in Q4.

• Supplier Spotlight: FedEx freight up 10% YoY; DHL inventory tightens 5%.

• Risks: Labor shortages could hit holiday capacity.

GROUND FREIGHT

• Category Supply and Lead Time Specifics: Capacity down as private fleets hire; lead times 3-5 days; utilization at 85%.

• Change Factors: Trucker shortages reduce supply; demand decline eases pressure.

• Forecast Rationale: Tight through Q2 2025, improving by Q1 2026 as hiring stabilizes.

• Risks: Fuel cost spikes (up 3% YoY) could raise rates.

• Opportunities: Excess inventory (10% above norm) aids short-term supply.

PRICING TRENDS & INSIGHTS

Pricing dynamics in Q3 2024 through Q2 2025 reflect a market balancing demand surges with capacity constraints.

• Air freight spot rates dropped 11% Month over Month in January yet remained 20% above last year, signaling sustained cost pressures into Q2 2025.

• Ocean freight rates ($5,175-$6,542/FEU) are elevated but expected to ease by March, though tariff uncertainties loom as a wildcard for Q4 spikes.

• Express/courier pricing is steady, with strategic GRIs from UPS and DHL, while FedEx maintains surcharges.

• Ground freight sees a 4.3% YoY rate dip in January, with gradual increases projected.

These trends, driven by capacity shortages, tariff fears, and supplier strategies, offer opportunities for rate locks but pose risks of customer resistance if costs escalate further.

AIR FREIGHT

• Pricing Specifics: Global spot rates were down 11% Month over Month in January 2025 but up 20% year over year; CN-US was flat at $5.88/kg (December 2024), and Europe-to-NA rates rose.

• Change Factors: Higher demand outpaces capacity; airlines push rates with forwarders.

• Forecast Rationale: Rates stay high through Q2 2025 due to load factor increases (52.5%), easing slightly by Q1 2026 as capacity grows.

• Risks: Customer pushback on 20% YoY increases may shift volume to Ocean Freight.

• Opportunities: 12-month flat-rate deals viable through Q2 2025.

OCEAN FREIGHT

• Pricing Specifics: As of Jan 22, 2025, West Coast $5,175/FEU, East Coast $6,542/FEU; up from end-2024 but expected to drop by March. 

• Change Factors: Trump tariff threats spike demand; Red Sea route and alliance shifts affect capacity. 

• Forecast Rationale: Short-term stability in Q2 2025, with potential tariff-driven spikes into Q4 2025. 

• Risks: Tariff-induced demand drops post-Q2 could lower rates, hurting ocean lines. 

• Opportunities: Lock in rates pre-peak (Q3 2025) to avoid surges. 

EXPRESS/COURIER

• Pricing Specifics: UPS GRIs will remain stable for 2025; DHL will push higher GRIs and drop the surcharge; and FedEx will keep the Asia-Europe surcharge. 

• Change Factors: Margin focus (UPS/DHL), FedEx shifts to heavyweight business. 

• Forecast Rationale: Flat pricing through Q2 2025, with holiday premiums in Q4. 

• Risks: DHL’s higher GRIs may cause the loss of price-sensitive clients. 

• Opportunities: FedEx’s freight focus opens capacity for bulk shippers. 

GROUND FREIGHT

• Pricing Specifics: Rates down 4.3% YoY (Jan 2025) after Dec rise; low single-digit increases projected for 2025. 

• Change Factors: Capacity reduction drives rate potential; demand decline softens pressure. 

• Forecast Rationale: Stabilization by Q2 2025 as capacity aligns with demand. 

• Risks: Higher rates may push shippers to private fleets. 

• Opportunities: Q2 2025 is ideal for long-term rate locks. 

 

KEY TAKEAWAYS

The logistics sector in the Americas faces significant challenges, notably air freight’s capacity strain, with demand growing at 6.1% compared to a 3.7% supply increase, and ocean freight’s disruptions driven by shifting alliances. Nevertheless, opportunities emerge for securing rate locks in air and ground freight by Q2 2025. Risks, including tariffs, geopolitical tensions, and labor shortages, pose substantial threats, especially during the Q4 2025 peak season. Strategic moves, such as FedEx’s focus on freight and Maersk’s emphasis on reliability, provide procurement advantages. Stakeholders—from airlines to small and medium enterprises (SMEs)—are grappling with cost pressures and supply constraints, making proactive contract negotiations and inventory buffers essential to maintain competitiveness through Q2 2025 and beyond. 

Air Freight 

• Opportunities and Challenges: Demand outpaces capacity (6.1% vs. 3.7%), enabling 12-month rate locks through Q2 2025; load factor (52.5%) strains supply. 

• Risk Assessment: Tariff volatility and geopolitical disruptions (e.g., Middle East) risk 10% cost spikes. 

• Strategic Implications: Negotiate flat rates now; diversify to Ocean Freight if rates exceed $6/kg. 

• Supplier/Stakeholder Impact: Airlines gain pricing power; SMEs face cost pressures. 

• Conclusion and Call to Action: Lock in capacity pre-Q3 2025 peak to mitigate rate hikes. 

Ocean Freight 

• Opportunities and Challenges: The Red Sea route cuts costs, and alliance shifts delayed service 4-6 weeks in Q2 2025. 

• Risk Assessment: Tariff demand drops post-Q2 risk $500/FEU losses; Suez instability adds uncertainty. 

• Strategic Implications: Secure pre-peak rates; buffer inventory for alliance upheaval.

• Supplier/Stakeholder Impact: Maersk/MSC reliability splits affect shippers; retailers adapt to delays. 

• Conclusion and Call to Action: Plan Q2 buffers now; monitor tariff impacts. 

Express/Courier 

• Opportunities and Challenges: FedEx freight capacity boosts bulk options; UPS/DHL margin focus limits growth. 

• Risk Assessment: Labor shortages risk Q4 delays; DHL GRIs may lose 5% market share. 

• Strategic Implications: Shift heavy shipments to FedEx; lock UPS rates early. 

• Supplier/Stakeholder Impact: FedEx gains bulk clients; GRIs squeeze SMEs. 

• Conclusion and Call to Action: Align with FedEx for Q4; reassess DHL in Q2 2025. 

Ground Freight 

• Opportunities and Challenges: Capacity alignment by Q2 2025 enables long-term rate locks; private fleets shrink supply. 

• Risk Assessment: Fuel costs (up 3%) and trucker shortages risk 5% rate hikes. 

• Strategic Implications: Secure Q2 contracts; explore private fleet partnerships. 

• Supplier/Stakeholder Impact: Providers gain pricing leverage; manufacturers face tight supply. 

• Conclusion and Call to Action: Lock rates in Q2 2025 for stability through 2026. 

LOOKING AHEAD 

• For indirect procurement and supply chain professionals, the year ahead presents a window to lock in strategic advantages amid fluctuating conditions.  

• Securing 12-month air freight contracts starting in Q2 2025 can mitigate rate spikes projected through Q4 2025, while ocean freight’s alliance-driven upheaval offers a chance to negotiate rates pre-Q3 peak, avoiding potential $500/FEU increases tied to tariff escalations. 

• Express/courier strategies should pivot to FedEx’s expanding freight capacity for Q4 2025 holiday surges. Ground freight’s stabilization by mid-2025 enables long-term rate locks (targeting low single-digit increases) through Q1 2026, offsetting fuel cost rises (up 3% YoY). 

• Risks loom large—geopolitical tensions (e.g., Middle East, Suez Canal) and tariff-induced demand swings could disrupt supply chains, particularly in Q4 2025—requiring diversified sourcing from suppliers like Delta (air), Maersk (ocean), and JB Hunt (ground), alongside a 20% inventory buffer pre-peak seasons.  

• Emerging trends, such as e-commerce’s 70% dominance of air demand and SMEs’ shift to private fleets, underscore the need for agile planning.  

By acting decisively from now through mid-2025, stakeholders can harness a trajectory toward cost stability and supply reliability by Q1 2026, provided they closely monitor tariff developments and consumer behavior.