News / Contract season in limbo as carriers eye conditions for a Red Sea return

Photo: © Rasmus Ursem

The Asia-Europe shipping contract season appears stuck in limbo, with shippers having delayed proceedings as they wait to see if the Israel-Hamas deal holds and the Red Sea becomes safe to use.

Speaking to the Freight Buyers Club podcast, Philip Damas, head of supply chain advisors practice and MD of Drewry Shipping Consultants, said he had seen some European importers postpone tenders as they seek to get a handle on 2025’s market.

“They have been hoping all along that the situation would improve for shippers, that the Suez Canal would reopen, and that rates would fall. But this has not happened yet, so we are sort of in a hiatus at the moment.”

Pointing to the earlier-than-usual Chinese New Year this week, Scan Global Logistics’ global head of ocean freight, Daniel Cacciotti, said 2025 was panning out a little differently to previous years.

Speaking on The Loadstar Podcast, he noted that the reason for delays to contract negotiations differed between verticals.

“You have retail mostly tendering now, after Chinese New Year, or starting the contract discussion in January or February, and that’s kind of a trend,” he explained.

“Then you have other verticals that are already starting. Tech is starting earlier, and I think that this is becoming common practice; it is something we have been seeing now on the Asia-westbound trade.”

Short-term, Mr Damas expected spot rates to fall, “particularly when they have already started falling”, and that a resumption of Suez Canal transits would only further erode spot rates.

Indeed, without carriers moving to mitigate the impact of canal reuse, a “collapse” in spot rates, Mr Damas said, would be prompted by “frankly huge overcapacity” as sailing times are drastically reduced.

“But, we do not expect carriers to rush to resume transits,” he added. “They’ll wait a week, frankly, to see if it’s a stable situation. They’ll also want to make sure the conditions are safe for their seafarers.”

Added to the equation, is the insurance industry, which will also be waiting to determine the risks of providing coverage.

Mr Damas noted: “They’ll wait to be convinced that they don’t have to pay an extra million dollars in insurance costs. So there’s quite a number of dominoes which have to fall into place before they go back to the Suez Canal.”