Navigating global logistics amid political shocks

The global logistics industry has never faced the new year with greater anxiety. Many manufacturers, shippers, and logistics providers are concerned that the announced tariffs and related pronouncements by U.S. President Donald Trump, as well as expected countermeasures by the affected countries, could lead to a global trade war.

Following his election, President Trump announced a massive increase in tariffs on imports from Mexico, Canada, Europe, China, and other countries to protect the U.S. industry and advance his political agenda. He also threatened the take-over of the Panama Canal to reduce the fees charged to U.S. vessels that use the passage between the Pacific and Atlantic oceans.

If implemented, all these measures would put a significant strain on global supply chains and force many companies to rethink their
procurement and logistics strategies.

Impact of tariffs

Shortly after his election, Trump threatened to impose blanket tariffs of 25% on Canada and Mexico. He also announced plans for general tariffs of 10% to 20% on imports from all other countries—and at least 60% on goods from China.

In the meantime, it’s not yet clear how high the tariffs will ultimately be for each country, when they’ll be implemented, or whether the announcement is simply being used as a threat to exert political pressure and negotiate deals.

However, even an announcement of tariffs is cause for great concern among shippers, notes Paul Brashier, vice president of global supply chains for global 3PL ITS Logistics. In an interview with the U.S. financial and business news provider Business Insider, he explains that he’s been working with clients on tariff-related contingency plans since 2024.

“Shippers realized that tariffs were coming into place, and they all started shipping heavy to get ahead of those tariffs,” says Brashier. His concern is that this rush could increase the price of shipping containers, increase the cost of inland transportation and storage, and inflate the risk of port congestion.

Lars Jensen, Danish shipping expert from Vespucci Maritime, also predicts a short-term increase in U.S. import demand, as shippers with non-time-critical goods will import more goods before the introduction of new tariffs. In the longer term, he expects more changes in supply chain patterns as the US trade war heats up.

“For U.S. imports, this would most likely entail more changes in sourcing patterns such as what we, for example, have seen with Chinese goods in recent years routed via Mexico,” says Jensen. “But we might also expect this to add a negative impact on U.S. exports due to retaliatory tariffs—and in turn increasing the imbalance between full and empty container flows.”

John Manners-Bell, CEO of London-based freight consultancy Transport Intelligence (Ti), expects that tariffs will lead to more re-shoring, and thus Chinese manufacturers relocating production and warehousing to the U.S. and near-sourcing of goods from Mexico. However, he adds that these flows could also be targeted if Trump believes Chinese manufacturers are undermining the USMCA trade agreement.

Manners-Bell anticipates that, contrary to the deflationary pressures of lower oil and less regulation, tariffs will drive up prices for consumers and manufacturers. Furthermore, he believes that “Europe will not be spared from these trade measures, as relations during the last Trump presidency were very strained,” he says. “If Europe retaliates by introducing its own trade measures, this will affect trans-Atlantic trade, but potentially also support and protect European manufacturing and increase local logistics demand.”

Focus on China

An example of the impact of tariffs and the resulting spiral of countermeasures can be seen in the European Commission’s recent approach to implementing tariffs on Chinese electric vehicles (EVs).

After the U.S. and Canada raised tariffs on Chinese EVs to 100% across the board in 2024, and included tariff increases on other materials and inputs in the EV supply chain, the European Commission concluded that its anti-subsidy investigation by imposing countervailing tariffs on imports of EVs from China on October 31, 2024, for a period of five years.

EVs produced by Shanghai Automotive Industry Corporation (SAIC) will face tariffs of 35.3%, Geely 18.8%, and BYD Co. 17%. These are on top of the 10% tariff already imposed by the EU on all car imports. Other cooperating companies will be subject to a 20.7% tariff, while non-cooperating companies will face a 35.3% tariff.

European and U.S. manufacturers of EVs will have lower tariffs on their exports from China to the EU. Following a substantiated request for individual examination, Tesla will be assigned a rate of 7.8%. The Commission remains open to negotiating price undertakings with individual exporters, as permitted under EU and World Trade Organization (WTO) rules.

China has consistently denied the existence of subsidies to its automakers and filed a dispute complaint to the WTO in November 2024. According to an S&P Global Mobility research analysis, various responses from Chinese car manufacturers to the EU tariffs are to be expected. Moving production to Europe or surrounding regions is one of them.

For example, BYD plans to open production sites in Hungary and Turkey during the next three years. Another one is that Chinese manufacturers will replace some of the decreased EV exports to the EU with more exports of internal combustion engines (ICEs), hybrids, and plug-in hybrids, as the latest EU tariffs don’t apply to these vehicles.

Negotiations between the EU Commission and China continue, and it remains to be seen whether the spiral of tariffs and countermeasures can be stopped in 2025 and a trade war avoided.

The effects of EU tariffs were also felt by Europe’s leading ports and automotive hubs. According to U.K. aftersales and finished vehicle transport specialist Metro Global, ports such as Antwerp-Zeebrugge and Bremerhaven were literally flooded with electric vehicle imports from China before the new EU tariffs were introduced. This surge in imports turned car terminals into giant parking lots. Sluggish EV sales and a shortage of truck drivers, equipment, and ro-ro capacity have increased the congestion.

China’s automotive giants are responding to the problem by building their own ro-ro vessels. BYD put its first three car carriers into operation in 2024.

In fact, BYD Explorer No.1 was launched in January 2024. BYD Hefei was completed in September, while the newest one, BYD Changzhou, followed in November. The Changzhou, an LNG-dual-fuel car carrier with a capacity of up to 7,000 vehicles, is in the schedule to arrive at ports in Europe this month.

New carrier alliances in ocean freight

February 2025 will also bring significant changes for global ocean freight and marks a turning point.

In the market environment of the dissolution of the 2M alliance between MSC and MAERSK, new cooperations are forming among shipping companies, while new slot and vessel sharing agreements are
being concluded.

Jan Tiedemann, chief analyst at maritime data firm Alphaliner, analyzed the developments of alliances in container shipping in his evaluation titled “AXS Marine—Liner Shipping-Status and Perspectives” in November 2024. According his analyses, around one third of the global fleet capacity (around 11 million TEU) is currently operated as part of one of the three major shipping company alliances Ocean Alliance, 2M, and THE Alliance.

“This figure of around a third of the total is lower than you might think,” says Tiedemann. “The reason for this is simply that all alliance partners only contribute part of their fleet to the jointly operated networks. This so-called ‘exposure’ ranges from just 26% in the case of MSC to more than 80% in the case of Yang Ming. As a rule, the proportion of capacity brought in from the individual shipping companies’ own fleets is between 40% and 65%.”

Tiedemann points out that the three major alliances dominate the important east-west routes. The Ocean Alliance leads the ranking, and, with its alliance partners CMA CGM, Cosco, and Evergreen, has a fleet with a capacity of 4.39 million TEU. It’s followed by 2M with 3.44 million TEU and THE Alliance with 3.22 million TEU.

“It’s not yet possible to predict exactly how large the fleets of the new alliances will be from February 2025, as the shipping companies have not yet published all their schedules,” says Tiedemann.

However, assuming that each carrier joins the new alliance with a fleet share that corresponds to the current fleet share, Tiedemann estimates that the Ocean Alliance will be in first place with 4.39 million TEU, followed by the Gemini Cooperation with 2.67 million TEU, and the Premier Alliance with 2.36 million TEU.

Global contract logistics market size

MSC will no longer be a member of any alliance from February 2025, but will probably operate around 2.5 million TEU of capacity on the corresponding routes. MSC will largely rely on its own port-to-port direct services as the world’s largest carrier after the end of the 2M Alliance in 2025.

A total of 34 loops will ensure extensive coverage on the trade routes that are particularly important for MSC, which include Asia-North America, Asia-Europe, the Mediterranean, and the trans-Atlantic. This will be supplemented by slot and vessel sharing agreements with the Premier Alliance and ZIM.

The Premier Alliance is entering the market as the successor to the previous THE Alliance. The partners in this new alliance are the shipping companies Ocean Network Express (ONE), HMM, and Yang Ming. The Premier Alliance is focusing on the East-West trade routes that are particularly important to it.

On the routes between Asia-Europe, Asia-North America, and Asia-Mediterranean, the alliance aims to expand its services by increasing the number of direct port calls and the frequency of departures. Of the six Asia-North Europe routes, five services are to be operated in cooperation with MSC.

With these changes to the major alliances, the shipping companies are striving for greater efficiency and an expansion of their services. For shippers, this opens up new options for planning their global transport chains.

Resilient logistics market

The global contract logistics market also felt the effects of geopolitical tensions and uncertain economic developments in 2024. This was the conclusion reached by the U.K. market researchers from Transport Intelligence (Ti) in their analysis and forecast report published in December 2024.

According to Ti analysts: “External factors such as high inflation, uncertain economic developments, geopolitical conflicts, and labor shortages have impacted the projected recovery in the year. Though inflation has fallen, recovery has not been immediate and palpable, while the ongoing geopolitical issues in the Red Sea and Europe have softened demand.”

Compared to the forecast for the full year of 2023, Ti now anticipates a slower growth rate in global contract logistics for all of 2024 of approximately 3.6% to €294.3 billion. In particular, the emerging economies of Asia have driven growth through 2024. Ti forecasts year-over-year growth of 7.1% to €115.4 billion in 2024 and 7.2% in 2025. Looking forward to 2028, the Asia-Pacific region is set to grow by 6.9%.

North America is expected to grow more slowly at 1.7% to €74.7 billion and at 3.2% in 2025. Ti anticipates an average of 2.8% in the forecast period up to 2028. The European contract logistics market is holding back global growth with forecasts of only 0.7% growth to €85.7 billion in 2024 and 1.8% in 2025. Looking forward to 2028, Ti expects that Europe will continue to grow at a relatively slow rate of 1.7%.

Chinese parcel service providers in particular, which recorded annual volume growth of more than 15%, drove the contract logistics market in the APAC region. However, e-commerce is also becoming increasingly important for 3PL providers. Some have taken advantage of the growing online retailers such as Shein and Temu that have shipped significant volumes from China to Europe and the United States.

According to Ti, contract logistics is resilient to political and economic shocks, as can be seen by integrators and 3PLs. In the end, major 3PLs have shown resilience in the face of geopolitical conflagrations.

Global mergers and acquisitions

In the face of geopolitical conflicts and economic woes, major global logistics providers in 2024 have also demonstrated their resilience by expanding their market presence.

The logistics market has seen remarkable merger and acquisition (M&A) activities, especially in the last months of 2024, with acquisitions demonstrating that it’s no longer just about creating global networks, but also about being present in key strategic markets and connecting international traffic with the hinterland.

A notable M&A example was the acquisition of a majority stake in IMC Logistics (IMC) by the logistics provider Kühne + Nagel (KN). In November 2024, KN announced that it would buy 51% of IMC, a leading marine drayage provider specialized in comprehensive end-to-end transportation solutions to or from seaports or rail hubs, customer facilities, and inland in the U.S.

With this investment, the Swiss-based company will enhance its access to one of the most important logistics networks in North America and ensure flexible transportation solutions in times of increasing supply chain disruptions. The transaction is expected to close early in the first quarter of 2025.

One of the largest acquisitions was made by DSV in September 2024, after agreeing to buy Schenker, the logistics arm of German state rail operator Deutsche Bahn, for €14.3 billion. DSV described the acquisition of Schenker as a transformational transaction for the company, “creating a world-leading player in the global transportation and logistics industry.”

Together, DSV and Schenker will have a combined revenue of DKK 293 billion, based on pro forma full year 2023 financials, and a combined workforce of approximately 147,000 employees in more than 90 countries. Schenker’s global network will be added to DSV’s Air & Sea division, creating a combined network handling approximately 4.3 million containers (TEU) and 2.4 million tons of airfreight annually.

For the DSV road division, the acquisition will create a combined network based on Schenker’s strong position in Europe. The company believes that “significant commercial and operational synergies will be achieved.”

Furthermore, it will increase the company’s total warehouse capacity to approximately 17.5 million square meters in more than 60 countries. DSV expects to complete the acquisition of DB Schenker from Deutsche Bahn in the second quarter of 2025.

What’s ahead?

Looking ahead to 2025, when Trump is back in the Oval Office, Dan Gardner, president of Trade Facilitators, a Los Angeles-based consulting firm specializing in global supply chain and logistics management and U.S. trade compliance, as fairly straightforward.

“Businesses are nervous, not only about the size of the tariffs, but also the timeline,” says Gardner. “I don’t think anybody, or at least any conscientious participant in global trade, wants to do business on the backs of chaos and suffering. But the fact remains that companies will move forward, and there will be work to be done on the advisory side.”