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European shipping and logistics players are facing mounting headwinds as freight rates plunge to their lowest since early 2024 and demand remains weak. Ocean-container rates have collapsed largely due to oversupply and softer demand following U.S. tariff measures. Although container volumes grew about 4% in the January-to-August window, analysts say that spike reflected advance shipments ahead of tariffs and won't sustain rates. Firms such as DSV and Kuehne + Nagel are expected to report weaker quarterly results, while Maersk appears better insulated thanks to long-term contracts.
European shipping and logistics companies are entering the earnings season under increasing strain because freight rates have fallen significantly and demand remains muted. Ocean container rates have dropped to their lowest levels since January 2024, driven by an excess of industry capacity and weaker demand in the wake of new U.S. tariffs. Advertisement
Volume of containers transported rose about 4% from January through August, yet analysts caution this growth was mainly caused by forward-loading before tariff changes and so offers only short-term relief to the rate environment.
As a result, analysts expect many companies to either downgrade their profit forecasts or report falling operating profits. For example, DSV is projected to reduce its guidance by about one billion Danish crowns (roughly USD 156 million) for its operating profit. Swiss forwarder Kuehne + Nagel is estimated to see a one-third drop in its quarterly operating profit. Meanwhile, German logistics major DHL Group is forecast to register a 4% decline in its quarterly operating profit, mainly due to softness in its express and forwarding segments.
In contrast, Maersk stands out as somewhat more resilient. Analysts note that up to 72% of its container rates are locked in through long-term contracts this year, meaning the company has had a buffer against the immediate drop in spot rates. However, it is also acknowledged that once those contracts roll over, the company's ocean business will eventually feel the effect of the broader rate decline.
Looking back, the container-shipping sector has been warning for some time about excessive capacity and the risk of rate erosion. Early in 2024, executives had said freight-rates had reached "unsustainable levels" amid surplus vessels and weakened demand. The current slide continues that trend of normalization from the unusually high rates of the post-pandemic years. Analysts now say the combination of weak demand, excess capacity and tariff-led uncertainty is underscoring a structural adjustment rather than just a temporary dip.
Source Reuters
5th Jun, 2025
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