Asia-US Container Rates: Short-Term Rebound Fails to Halt Deep Market Downturn

Although spot rates on the Transpacific recorded a slight increase over the past week, persistent overcapacity keeps current levels significantly lower than in November, posing a challenge for carriers ahead of contract negotiations.

container-ship

Container freight rates on the vital Transpacific eastbound trade lane from Asia to the US edged up last week.

However, these modest gains were not enough to offset the sharp 20-30% price drop compared to November levels.

Specifically, spot rates rose by 7%, or $140 per FEU (40-foot equivalent unit), marking a short-term price recovery after bottoming out in late November.

Despite this, according to data updates from analysts at Xeneta and eeSea, current rates remain 32% lower (equivalent to a $950/FEU drop) than in early November, as the market adjusts to previous shifts in capacity and demand.

Commenting on the current landscape, Peter Sand, Chief Analyst at Xeneta, said: “The backdrop is still one of oversupply compared to demand and that is seen clearly in the fact rates are still not back to where they were a month ago despite a fairly chunky increase in the past week.”

Sand further emphasized the negotiation strategy for shippers: “Shippers should reflect on this weaker market the next time a carrier asks for a general rate increase (GRI), because it would not appear to be justified against the level of demand versus capacity.”

SONAR index shows a decrease in container shipping between China and the United States this year compared to 2024 and 2023 (Source: SONAR)

Fluctuations on US Coasts

Spot rates serve as a crucial indicator for building rate indices as shippers and carriers prepare for contract negotiations, which are set to heat up in January.

• West Coast: Offered capacity remained flat or dipped slightly by 1% over the past week, indicating no significant tonnage expansion. However, compared to November, capacity has risen by 7% (equivalent to 20,000 TEU). Much lower prices are tracking the trend of higher supply, despite the recent modest price recovery.

• East Coast: Spot rates rose by approximately 8% ($220/FEU) week-on-week, showing short-term firmness. However, prices remain 21% weaker ($750/FEU) than a month ago – a significant correction over that period. Capacity was cut by 3% last week, helping to boost rates, but overall remains 12% higher (about 20,000 TEU) than last month.

Xeneta noted that this tentative stability contrasts with the reality of more ships and lower rates.

Contrast on the Asia-Europe Trade

The landscape is entirely different on other trade lanes.

Peter Sand observed: “Far East to North Europe currently shows both demand and supply strength, carriers are adding capacity and rates are still edging up rather than softening.”

He stated that spot rate increases were even stronger from the Far East to the Mediterranean, with sustained double-digit growth over the past month as carriers reduced capacity. Sand also suggested the Asia-Europe trade might be benefiting from developments surrounding the Red Sea - Suez Canal route.

“This shows carriers are warming up for a return to the region, but there are a number of steps to go through before this happens at a large scale and transits remain at low numbers compared to before the Red Sea crisis escalated,” he said.

See more: