Escalating Tariffs and Trade Shifts: How Cosco’s 2024 Success Signals Challenges Ahead

The container shipping industry is bracing for a seismic shift in 2025, driven by escalating tariffs and evolving trade policies. Cosco Shipping Holdings, the world’s fourth-largest carrier by tonnage according to Alphaliner, warned on Friday that these forces will trigger “profound changes in global cargo flow patterns.” This forecast comes on the heels of a stellar 2024, where Cosco reported a 106% surge in net profit to $6.8 billion and a 33% revenue increase to $32 billion. At Gain Consulting, we’ve dug into Cosco’s performance and outlook to unpack what these tariff-driven changes mean for supply chains—and how businesses can prepare for a turbulent year ahead.

Cosco’s 2024: A Banner Year Amid Rising Rates

Cosco’s 2024 success was fueled by a potent mix of higher freight rates and robust volume growth. The carrier’s total container volumes rose 10% year-over-year, while average revenue per TEU on international routes jumped 30% to $1,055. This propelled revenues across key trades: trans-Pacific spiked 63% to $9 billion on a 13% volume increase, Asia-Europe climbed 41% to $6.4 billion despite a 13% drop in liftings, intra-Asia (including Australia) grew 23% to $7.4 billion with an 11% volume uptick, and other trades (trans-Atlantic and Latin America) rose 27% to $4.5 billion on 10% higher liftings.

The profit breakdown highlights Cosco’s dual-brand strength: Cosco Shipping Lines contributed roughly $4.3 billion, with the remainder from subsidiary Orient Overseas Container Line (OOCL) and terminal arm Cosco Shipping Port, which saw a 5% profit dip to $309 million. Industrywide, Sea-Intelligence Maritime Analysis estimates operating profits hit nearly $60 billion in 2024—a high-water mark that analysts warn may signal the start of a downcycle in 2025.

Tariffs and Trade: A Looming Disruption

Cosco’s outlook hinges on a critical variable: tariffs. With policies like the U.S.’s paused USMCA exemption (set to expire April 2, 2025) and potential escalations under review, the carrier predicts a moderation in container shipping demand growth. This shift is partly due to easing global inflationary pressures and accommodative monetary policies in Europe and the U.S., which could dampen the urgency of goods movement seen in recent years. But the real game-changer is the “profound” rerouting of cargo flows as tariffs reshape trade lanes.

Take the Asia-Europe trade: despite a 13% volume drop in 2024, revenues soared 41% due to higher rates and capacity cuts from Red Sea diversions around the Cape of Good Hope to avoid Houthi attacks. Tariffs could amplify such disruptions, forcing shippers to rethink sourcing and routing strategies. The trans-Pacific trade, Cosco’s revenue leader, may face similar upheaval if U.S. tariffs spike, potentially pushing manufacturers to nearshore or diversify away from China.

Competition Heats Up: Digitalization and Green Initiatives

Cosco also flagged rising competition in 2025, driven by changes in major container shipping alliances. Two battlegrounds stand out: digitalized supply chains and green, low-carbon development. The carrier is leaning into both, accelerating its dual-brand fleet with a 2024 order for twelve 14,000-TEU methanol dual-fuel ships—a nod to sustainability amid tightening emissions regulations. These moves position Cosco to compete not just on price, but on innovation and environmental credentials.

Digitalization, meanwhile, is reshaping how carriers manage capacity and customer relationships. Cosco’s investments here could streamline operations and enhance visibility, giving it an edge in a market where shippers demand real-time data and flexibility.

A Downcycle on the Horizon?

Despite 2024’s windfall, analysts like Sea-Intelligence see storm clouds gathering. The $60 billion industry profit peak may mark the top of a cycle, with freight rates likely to soften as demand cools and capacity normalizes. Cosco’s 30% TEU revenue jump in 2024 was a boon, but sustaining that in a tariff-heavy, competitive 2025 will be tough. The carrier’s proactive fleet expansion and focus on high-value trades suggest it’s preparing for leaner times, but shippers should expect rate volatility and tighter margins.

What This Means for Supply Chains

At Gain Consulting, we see Cosco’s insights as a wake-up call for supply chain leaders. Here’s how these trends could impact your operations:

1. Trade Pattern Shifts

   Tariffs will redraw global cargo flows, potentially shrinking trans-Pacific volumes while boosting intra-Asia or Latin American trades. Businesses must stress-test their sourcing strategies—where will your goods come from if China costs spike?

2. Rate Volatility

   After 2024’s rate surge, a downcycle looms. Locking in contracts now could hedge against short-term drops, but flexibility will be key as tariffs disrupt pricing. The 63% trans-Pacific revenue jump Cosco enjoyed may not repeat if demand softens.

3. Sustainability Pressure

   Cosco’s methanol ship investment reflects a broader push for green logistics. Shippers face rising expectations from regulators and consumers to cut carbon footprints—ignoring this could mean lost business or higher costs down the line.

4. Digital Advantage

   Competition in digitalized supply chains means carriers like Cosco will prioritize tech-savvy partners. Upgrading your systems for better tracking and coordination could secure preferential rates and service.

   
   

Opportunities Amid the Chaos

The “profound changes” Cosco predicts aren’t just risks—they’re openings. Businesses that adapt to new trade patterns can capture emerging markets. Those investing in sustainability can align with carriers like Cosco, potentially negotiating better terms. And digital pioneers can streamline operations to offset rate swings.

How Gain Consulting Can Steer You Forward

At Gain Consulting, we’re equipped to turn tariff-driven uncertainty into strategic advantage:

• Trade Lane Analysis: We’ll map your exposure to tariff risks and identify alternative routes—like intra-Asia or Latin America—to diversify your supply chain.

• Rate Negotiation: Our team can secure favorable contracts with carriers like Cosco, balancing short-term savings with long-term flexibility.

• Sustainability Strategy: From carbon audits to green carrier partnerships, we’ll align your operations with the industry’s low-carbon shift.

• Digital Transformation: We’ll enhance your tech stack for real-time visibility, ensuring you stay competitive in a digital-first market.

Preparing for 2025

Cosco’s $6.8 billion profit in 2024 showcases the highs of a booming market, but its tariff warning and the looming downcycle signal a challenging 2025. Supply chains must evolve—fast. Whether it’s rerouting cargo, embracing green tech, or outpacing competitors digitally, the winners will be those who act decisively.

Ready to navigate these profound changes? Contact Gain Consulting today. Let’s build a supply chain that doesn’t just survive the tariff tumult—but thrives through it, leveraging Cosco’s lessons to keep you ahead of the curve.