In 2024, due to the Red Sea crisis, the shipping costs of textile exports doubled, making many textile companies miserable. However, as the situation between Palestine and Israel gradually eased, shipping costs in 2025 showed a clear downward trend.
Sea-Intelligence, a well-known maritime consulting firm, wrote that if container shipping companies can safely cross the Red Sea and the Suez Canal again, this may trigger a "price war". In the past year, the issue of shipping route safety has become a major concern for global logistics, especially the safety of navigation around the Red Sea and the Suez Canal. The attack on merchant ships by the Iran-backed Houthi armed group has led many shipping companies to choose to detour through southern Africa to avoid the Red Sea and the Suez Canal, an important global shipping channel. Once the situation in the Red Sea stabilizes, shipping companies may usher in a "price competition" when they reopen this route, and freight rates will show a rapid downward trend.
According to the forecast of Sea-Intelligence, a shipping analysis agency, if the Red Sea route is reopened, the freight rates of container transportation are likely to fall by 60% to 70% within six months. This change will profoundly affect the supply and demand pattern of the global shipping market and may bring about market conditions similar to or more severe than those at the end of 2023. Analysts believe that once shipping companies resume the use of the Red Sea route, freight rates may fall sharply. Due to the oversupply of market demand, the container shipping market will fall into a "price competition". In order to compete for market share, shipping companies may not hesitate to cut prices to attract customers. In addition, due to high profits, global shipping capacity has grown rapidly in recent years.
According to Adam Kent, managing director of Maritime Strategies International, an industry research organization, the shipping industry is facing the most serious overcapacity problem since 2007. Kent pointed out that in 2024, except for dry bulk carriers, orders for other ship types have increased significantly. Last year's global new shipbuilding orders may become the second highest year in history, with annual orders of about 125 million deadweight tons (DWT), second only to the orders of about 170 million deadweight tons in 2007. Data shows that in 2024, shipyards received 24% more orders than the previous year, especially for container ships, tankers and LNG ships. According to the new data, the total order volume reached US$190.3 billion. Kent expects shipping earnings to decline in the coming years, but he stressed: "This is just a mild adjustment, not a collapse." Compared with historical averages, current earnings are still at a relatively high level. He also expects that the price of new ships will also fall. China has become the dominant player in the global shipbuilding industry, producing about 60% of commercial ships and nearly 50% of special ships. "The progress of China's shipbuilding industry may surprise many people, especially the rapid improvement of its production efficiency," said Kent.
