CONTAINER QUARTERLY: Outlook remains grim as carriers struggle with overcapacity, weak demand in Q1 2025

The European container market experienced further deterioration in the first quarter of 2025, marked by persistent bearish sentiment and significant fluctuations in spot rates.

The quarter was defined by aggressive pricing strategies among carriers, compounded by geopolitical uncertainties and ongoing port congestion.

January opened with a dramatic decline in spot rates, as the Platts Container Rate 1 -- PCR 1 -- for westbound shipments from North Asia to North Europe plummeted from $5,000/FEU at the start of the month to a low of $3,000/FEU by Jan. 31. This 40% drop was primarily driven by a price dispute among carriers, as they scrambled to retain market share amid the reshuffling of alliances.

"The alliance changes have forced carriers to adopt aggressive pricing strategies, leading to unsustainable rate levels," a forwarder source said. "It's a race to the bottom, and unfortunately, shippers are caught in the crossfire."

Similarly, rates into the Mediterranean -- PCR 3 -- followed a downward trajectory, starting at $5,300/FEU and falling to $4,300/FEU by month-end. The lack of demand post-Lunar New Year exacerbated the situation, as carriers faced challenges in securing bookings.

February continued the downward trend, with PCR 1 assessed at $2,400/FEU by the end of the month, reflecting a further decline amid ongoing labor strikes that caused congestion at major European ports. The strikes led to significant delays and prompted carriers to reroute ships, further complicating the supply chain.

"Port congestion is a major headache for everyone involved," a carrier source said. "With delays of up to 10 days in Rotterdam, we are forced to consider alternative ports, which adds to our costs and complicates logistics."

March saw a continuation of the bearish sentiment, with PCR 1 hitting a low of $1,800/FEU by the end of the month. This marked a significant decline from February, highlighting the intense competition among carriers desperate to fill capacity in a slack demand environment. The Mediterranean rates -- PCR 3 -- also softened, falling to $2,600/FEU, as carriers struggled to balance capacity utilization with dwindling demand.

"Carriers are throwing out all sorts of deals, but the reality is that the market is oversaturated, and rates are in free fall," a forwarder said. "It's going to take some time for the market to stabilize."

Long-term contracts under pressure as shippers adopt a cautious approach

As the quarter progressed, shippers began to adopt a more cautious stance, with many opting for spot bookings rather than committing to long-term contracts. The volatility in spot rates and the unpredictable market conditions have led to a wait-and-see approach among many market participants.

"The uncertainty in the market is palpable, and shippers are understandably hesitant to lock in long-term agreements when rates are fluctuating so wildly," a logistics analyst said. "This trend is likely to continue as we head into the second quarter."

In conclusion, Q1 2025 was characterized by a challenging landscape for the European container market, with bearish trends dominating the narrative. As carriers grapple with overcapacity, weak demand, and ongoing geopolitical uncertainties, the outlook for the upcoming quarters remains uncertain, leaving many participants on edge as they navigate this turbulent environment.