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Ratings on container shipping companies may show resiliency despite trade tensions continuing to disrupt global freight, trade patterns, and supply chains.

S&P Global Ratings anticipates that the container liners and containership tonnage providers we rate will sustain credit metrics within our rating thresholds, even in the face of heightened volatility. Our rated container liners are becoming increasingly agile at adapting to erratic shifts within the volatile shipping industry, which is evident in their capacity management strategies and ability to realign networks to often unpredictable swings in market demands.

What We're Watching

When the Trump administration first implemented its unpreceded tariff policy on April 2, China-U.S. container volumes plummeted by 30%-40%. But volumes have rebounded following the temporary U.S.-China 90-day tariff de-escalation deal announced on May 12 as businesses have scrambled to front-load freight during this period. Meanwhile, activity on other trade lanes has remained robust, according to many container liners.

Container shipping freight rates entered 2025 from a position of strength after surging in 2024, as the ongoing Red Sea crisis continued to absorb ship capacity and supported by robust trade volumes. As an indicator of pricing, the Shanghai Containerized Freight Index averaged 2,506 in 2024—more than doubling from 1,006 in 2023, well below the record high pandemic-induced averages of 3,410 in 2022 and 3,772 in 2021, and far above its pre-pandemic position of 810 in 2019—according to the shipping data and intelligence provider Clarksons Research.

However, average freight rates fell in the first quarter of 2025 due to lingering overcapacity and amid rising macroeconomic and geopolitical uncertainty, and we expect them to fall below the 2024-level this year.

We will be closely monitoring how trade deals materialize, particularly after the pause on reciprocal tariffs ends on July 9. In recent days, the U.S. and China appear to be close to completing a trade deal on potentially more sustainable terms, according to several media reports, but negotiations could still be ongoing for some time.

What We Think And Why

Looking ahead, we believe container liners' ample ratings headroom, alongside their adaptability and agility amid fast-moving trading conditions, will help to support current rating levels. As another indicator, listed container carrier companies that we rate have recently reaffirmed their clearly positive EBITDA guidance for 2025.

The robust credit quality of container shipping companies follows record-high freight rates over 2021-2022 that translated into extraordinary free cash flows, reduced debt, and credit rating upgrades. Shipping companies had another year of strong earnings in 2024, as reflected in our stable outlooks. We forecast the credit metrics of our rated container liners (A.P. Moller - Maersk A/S, CMA CGM S.A., and Hapag-Lloyd AG) will remain well within our current ratings' thresholds in 2025, and likely in 2026, albeit with diminishing headroom for unforeseen operational setbacks or cash- or debt-funded mergers and acquisitions.

Our base case factors in that container shipping companies will continue employing a variety of means to manage the inherent volatility and increased operational challenges. Container liners have a range of tools to manage excess supply, many of which have been tested in recent years. They include cancelling routes (known as loop withdrawals), skipping or cancelling stops (blank sailing), slow steaming, re-routing, swift capacity reallocation and vessel swapping (switching to smaller or larger ships), and deferral of new vessel deliveries.

We anticipate that current robust trading will continue into the beginning of the third quarter—underpinned by frontloading and restocking amid uncertain future tariff levels, but visibility beyond that is low.

If the U.S.-China tariff deal turns into a more sustainable agreement, annual growth rates in transported global volumes are likely to see low single-digit growth in 2025 and a similar scenario in 2026. This trajectory is in alignment with global GDP growth trends and follows last year's solid mid-single-digit volume growth and flat development in 2023.

That said, the prevailing supply-demand imbalance on how many ships are available to carry imports and exports permeating during the tariff discussions runs the risk of pressuring freight rates. In our base-case forecasts we assume that average freight rates will decrease by around 10% in 2025 due to these lingering supply-side pressures. We anticipate that the diversion of container ships from the Red Sea will persist, as there are no indications of a lasting resolution to the geopolitical conflicts in the Middle East. As a result, significant capacity absorption is likely to continue this year.

However, container trade growth will fall short of the new containership capacity growth of 6%-7% in 2025, according to Clarksons Research. This follows a sharp increase in supply growth of approximately 10% in 2024 and 8% in 2023. Nevertheless, potentially slower vessel speeds and an uptick in scrapping could somewhat taper the anticipated oversupply.

What Could Change

Our forecasts are subject to various demand risks, notably arising from implemented or future U.S. trade tariffs and retaliation by other countries. Shipping rates could become even more volatile or fall if demand significantly and sustainably drops. Global trade volumes could also experience reductions as goods become relatively more expensive for U.S. consumers and as any retaliatory tariffs placed on U.S. goods have a similar impact elsewhere.

Further uncertainty stems from the supply side in the context of the ongoing disruption in the Red Sea, which we expect to continue through year-end. While a gradual return of container liners to the Suez Canal is possible in 2026 (subject to improved security conditions in the region), our base case assumes that the resultant release of tonnage into the network would be largely offset by operators' stringent and timely capacity management, which will be essential to safeguard profitable freight rates.

Although not in our base case, we could see container liners' results coming under significant pressure if supply discipline regarding vessel capacity were to fail to largely resolve the oversupply pressure.

Writer: Molly Mintz