In 2024, due to the Red Sea crisis, the shipping costs of textile exports are likely to double. However, with the gradual easing of the Palestinian-Israeli situation, there is a clear downward trend in shipping costs in 2025.

The latest Shanghai export Container Freight Index (SCFI) fell 148.8 points, or 7.27 per cent, and has fallen below the 2,000 mark to 1,896.65 points, and has fallen for four consecutive weeks. The four major ocean routes all declined, of which the European line continued to enter the off-season, the cargo volume decreased, and the decline was particularly significant, reaching 15.93%. The Eastern and Western United States also fell more than 4 percent.

Route 01 restart triggers capacity release

As a key waterway connecting Europe and Asia, the security situation of the Red Sea directly affects shipping costs. In 2024, due to Houthi attacks, shipping companies detoured the southern tip of Africa, increasing voyages by about 30 percent, causing freight rates to soar. If the situation in the Red Sea stabilizes in 2025, the resumption of the Suez Canal route will shorten voyages, reduce fuel and time costs, and free up significant shipping capacity. According to Sea-Intelligence forecasts, the resumption of Red Sea traffic could cause container rates to plummet 60-70% within six months, and even re-create the supply-demand imbalance seen at the end of 2023.

02 Motivation of price war and market game

In early 2025, Maersk and Mediterranean Shipping (MSC) took the lead in launching a price war on the Asia-Europe route, offering prices as low as $4,000 /FEU and $3,840 /FEU, respectively, prompting other shipping companies to follow. The move is aimed at gaining market share, especially after the restructuring of new shipping alliances (e.g., Gemini Alliance, MSC Independent Network, etc.), and the changing market landscape has prompted companies to attract customers through low prices.

03 Excess capacity and new ship delivery pressure

Orders from a special period a few years ago led to concentrated deliveries of new vessels in 2024-2025, with significant year-on-year growth in global capacity. For example, MSC will add 600,000 TEUs of capacity in 2025, and the backlog of ships during the Red Sea crisis has further exacerbated the oversupply. In order to avoid “flying in the air”, shipping companies have to increase the loading rate by reducing prices.

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In 2024, due to the Red Sea crisis and tariff concerns, importers stockpiled goods in advance, overdrawing part of the demand. In 2025, with the easing of the situation, the end of the replenishment cycle, the slowdown in demand growth in emerging markets such as cross-border e-commerce, and the decline in freight demand will further reduce freight rates.

The risk of US port strikes and tariffs imposed by the Trump administration could disrupt supply chains, but in the short term these factors are overshadowed by the capacity release effect of the Red Sea resumption. In the long run, tariffs may prompt companies to adjust their supply chains, indirectly affecting shipping demand.

New alliances such as Gemini (Maersk and Hapag-Lloyd) use a “hub radiation” model to try to attract customers by improving route reliability (target 90% on-time performance); MSC, on the other hand, maintains its low price competition through its scale advantage. Different strategies may lead to market fragmentation, and customers may get more choices, but the price war is difficult to quell in the short term.

Although the current downward pressure on freight rates is significant, the long-term still depends on the global economic recovery and the balance between supply and demand. If the situation in the Red Sea is repeated or the geopolitical conflict is renewed, freight rates may rebound.

Serious global inflation may inhibit the growth of textile foreign trade, but the decline in freight is not a bad thing for textile foreign trade.