After Europe and America, Asia Is Next for Freight Rate Plunge

According to Yihangyun, the United Nations Conference on Trade and Development (UNCTAD) recently released the "Review of Maritime Transport 2025," warning that the global shipping industry is entering a period of fragile growth, rising costs, and increasing uncertainty. It has lowered the forecast for maritime trade growth this year to 0.5% and estimates container trade volume growth to be 1.4%.

Industry insiders have pointed out that freight rates on European and American routes are sluggish, and some ships are being redirected to intra-Asia routes, which may lead to a freight rate war in the Asian routes.

United Nations Conference on Trade and Development (UNCTAD)The report indicates that the global trade environment is becoming increasingly complex and uncertain, with major economies experiencing sluggish industrial activity and weak demand for bulk commodities from China. After strong growth last year, maritime trade is expected to stagnate by 2025, with almost no growth in freight volume. Geopolitical tensions leading to changes in long-distance shipping routes have made vessels busier than last year, resulting in longer maritime trade routes, which have increased from an average of 4,831 miles in 2018 to 5,245 miles in 2024, a nearly 6% increase and a record high.

Political tensions, new tariffs, changing trade patterns, and reconfigured shipping routes are reshaping the geography of maritime trade, resulting in more rerouting, skipped port calls, longer voyages, and ultimately increased costs. Energy transportation is also transforming, with coal and oil shipments pressured by decarbonization efforts, while natural gas trade continues to expand.

In addition, critical minerals are essential for batteries, renewable energy, and the entire digital economy, and are becoming a new source of global trade tensions, with countries competing to secure supplies and increase domestic value, leading to a sharp rise in shipping trade volumes.

The UN Conference on Trade and Development stated that freight rates have become more unstable, with disruptions such as the Red Sea crisis in 2024 driving up rates that year. Meanwhile, ongoing geopolitical tensions in 2025 have raised concerns about potential spillover effects that could disrupt shipping activities in the Strait of Hormuz.

The UNCTAD stated that environmental compliance costs, including emission pricing, are redefining the shipping economy, and persistent high transportation costs may hit developing countries the hardest, especially small island developing states and the least developed countries.

Ports are under pressure due to disruptions, resulting in congestion and extended waiting times. The UN Conference on Trade and Development (UNCTAD) urges governments to fulfill their global commitments on trade facilitation and automation, and to expand public-private partnerships in port operations. Additionally, with the advancement of digitalization, cybersecurity has become a key priority.

According to data from UNCTAD, greenhouse gas emissions from the shipping industry increased by 5% in 2024. According to the United Nations Conference on Trade and Development, only 8% of the world fleet tonnage is equipped to use alternative fuels, and the ship recycling rate remains very low.

Shipping and logistics companies have pointed out that freight rates on European and American routes are currently hovering around the cost line. To alleviate capacity, some vessels have been redirected to intra-Asia routes. According to Alphaliner's statistics, from August 2024 to August 2025, shipping companies will deploy up to 2.4 million TEUs (20-foot equivalent units) in capacity on Asian regional routes, representing an annual increase of approximately 13%. Since the beginning of this year, more than 20 new routes have been added, and a freight rate war on Asian routes is imminent.

The Asia route is classified as a short-haul route, and its freight rates are usually relatively stable. Therefore, if even the Asia route is experiencing a price war, it highlights the severe oversupply in the container shipping industry. According to the revenue share in 2024, Wan Hai (2615) accounts for 30%, Evergreen (2603) for 14%, and Yang Ming (2609) for 9%.

Currently, the order backlog of new container ships globally accounts for about 30% of the total capacity of the global container fleet. The global container shipping industry is experiencing an oversupply. However, the order backlog of new container ships for Taiwan's "three giants" is higher than that of their peers, with Evergreen's newbuilds accounting for 38% of its fleet, Yang Ming 33%, and Wan Hai 64%. In the future, they may face even greater pressure from oversupply.

Taiwan's shipping and logistics companies have indicated that based on past experience, long-haul routes to Europe and the United States tend to have lower freight rates, and when the load factor is insufficient, they often increase the collection of near-sea cargo, resulting in depressed freight rates on near-sea routes. It now depends on whether, after the freight rates drop below costs, old ships can be scrapped quickly to bring supply and demand into balance.