As the container shipping alliances prepare for a major restructuring in February 2025, a price war has quietly ignited on the Asia-Europe route. In the first two weeks of January, major shipping lines have aggressively reduced rates to compete for market share.

According to Linerlytica data, spot rates on the Shanghai-North Europe route rose slightly by 0.5% to $2,962/TEU as of December 27, 2024. However, this followed three consecutive weeks of declines. Early January saw significant rate fluctuations, with initial increases offset by subsequent reductions, reflecting the market's instability ahead of the alliance restructuring.

As the restructuring approaches, the market landscape is set for significant changes. Global leader MSC will operate independently starting in February, while former partner Maersk will team up with Hapag-Lloyd to form the new Gemini Alliance and exit THE Alliance. Meanwhile, THE Alliance will rebrand as the Premier Alliance and continue its collaboration with MSC on the Asia-Europe route.

Although Asia-Europe freight futures (EC2412 contract) ended December 2024 with a 4.4% gain, closing at 3,445 points, early 2025 futures have shown signs of uncertainty. In particular, the February contract (EC2502) dropped 13% in just one week, reflecting concerns over a potential sharp decline in rates after the Lunar New Year.

Linerlytica's analysis indicates that despite healthy vessel utilization rates, January's rate hikes lack momentum, suggesting further rate pressure post-holiday. For instance, Maersk's January rates have dropped to $4,800/FEU, prompting competitors to follow suit with reductions.

Short-Term Price War Intensifies

The intensity of the January price war will directly influence market trends in the coming weeks.

Post-Holiday Price Trends

Market forecasts suggest that rates will face greater pressure after the Lunar New Year in February, particularly as alliance restructuring may create market disruptions.

Long-Term Alliance Impact

MSC's independent operations and the rise of the Gemini Alliance could reshape the competitive dynamics on the Asia-Europe route.

For freight forwarders and shippers, the turbulence in the shipping market presents both challenges and opportunities. Flexibility in shipment strategies will be key to navigating the ongoing price war.