The global container shipping industry is on edge as stakeholders anticipate the resumption of full-scale transits through the Suez Canal before the end of 2025 and brace for potential tariff escalations under former President Donald Trump’s trade policies. According to a recent Drewry survey, industry players are divided on the impacts these developments will have on market dynamics, freight rates, and equity performance.
Shipping Stocks: A Wild Ride for Investors
The past five years have been a rollercoaster for container shipping equities. From the supply chain bottlenecks triggered by the COVID-19 pandemic to the subsequent surge and decline in stock values, liner stocks have mirrored the unpredictability of global trade. Investors who placed $1,000 into Drewry’s Container Equity Index in early 2019 would have seen their investment peak at $6,034 during the pandemic-fueled shipping boom. However, as of February 10, 2025, the index is down 50% from its peak, now valuing the same investment at $3,150. In contrast, a comparable investment in the S&P 500 would currently be worth $2,346.
Figure 1: Index prices of Drewry Container Equity Index vs. S&P 500
When Will Suez Canal Transits Resume?
The Suez Canal Authority, led by Osama Rabie, remains optimistic about a return to normal shipping operations, forecasting a full recovery by mid-2025 if the Gaza ceasefire holds. Drewry’s survey indicates that 54% of respondents share this expectation, while 29% foresee a resolution in 2026. Only 2% believe the disruption could last beyond 2030.
The canal’s reopening is a crucial factor in market forecasts. The ongoing Red Sea diversions have effectively reduced container shipping capacity by approximately 9%. A sudden reintegration of this capacity could drive freight rates downward, putting pressure on carrier profitability unless supply is balanced through alternate means.
Trump Tariffs: Trade Disruptions on the Horizon?
With Trump’s return to office, trade policy uncertainty looms large. The survey confirms widespread expectations of increased tariffs, particularly targeting China (85%), Mexico (76%), Canada (73%), and the European Union (60%). Even nations like India (16%) and Vietnam (14%)—traditionally seen as alternatives to Chinese manufacturing—are considered potential tariff targets.
The U.S. effective tariff rate, which stood at 2.4% in September 2024, is expected to rise significantly. According to survey participants, 32% predict a rate between 5% and 10% by the end of 2025, while 13% foresee a spike beyond 20%—a level not seen since the Great Depression.
Figure 2: Annual returns of Drewry Container Equity Index vs. S&P 500
Market Implications: Volatility and Strategy Shifts
Geopolitical uncertainty remains a dominant force in the shipping industry. The fragile Israel-Hamas ceasefire and U.S. diplomatic maneuvers add layers of unpredictability to trade routes. Meanwhile, Trump’s tariff policies could either disrupt global supply chains or prompt shifts in sourcing strategies.
For investors and shipping companies alike, the key question remains: Will these global developments make container shipping more or less functional? History suggests that crisis breeds opportunity in the shipping industry, but with rising volatility, strategic agility will be essential for navigating the turbulent waters ahead.
Source: drewry
