Polarized Ocean Freight Market: Asia-Europe Rates Surge Pre-Lunar New Year, While Transpacific Falters Despite Capacity Cuts

The container shipping market witnessed a stark contrast last week: while Asia-Europe rates rebounded strongly thanks to a year-end "mini-peak" and FAK hike strategies, the Transpacific route remained in the red despite efforts to cut capacity amidst severe volume shortages.

The container shipping market painted two completely opposite pictures last week. While spot freight rates on the Asia-Europe trade lane continued their upward climb, pushing prices back to levels last seen in late summer, US-bound routes are facing numerous difficulties.

Asia-Europe: Breaking Out Thanks to Year-End "New Normal"

The heat is returning to the Asia-Europe trade. Drewry's World Container Index (WCI) this week recorded a 5% increase on the Shanghai-Rotterdam leg, closing at $2,361/40ft. More impressively, the Shanghai-Genoa (Mediterranean) leg jumped 13%, breaking the $3,000 resistance barrier to hit $3,004/40ft – the highest level since mid-August.

Forwarders expect this momentum to continue, fueled by a new round of Freight All Kinds (FAK) rates. Industry giants such as Hapag-Lloyd, MSC, and CMA CGM have all announced FAK rates of $3,500/40ft for North Europe effective December 15. For the Mediterranean, MSC and Hapag-Lloyd are targeting $4,750 and $4,200 per 40ft, respectively.

Explaining this driver, Drewry suggests the market is forming a structural "mini-peak" ahead of the Lunar New Year.

Drewry analyzed: “Unlike the transpacific tradelane, spot rates on Asia-Europe have successfully maintained stable or rising rate levels for four consecutive weeks. This strength is driven by a shift in seasonal patterns.”

The consultancy added: “Over the last three years, Drewry has observed double-digit month-on-month demand growth in December, establishing strong year-end volumes as the ‘new normal.”

Regarding the short-term outlook, Drewry noted: “With the lunar new year falling in February, carriers are already seeing early bookings, leading Drewry to forecast further slight rate increases next week.”

To reinforce this trend, Maersk has applied a Peak Season Surcharge (PSS) of $1,000/40ft for Mediterranean cargo effective December 23. Today's SCFI also recorded impressive gains of 10% to North Europe and 19% to the Mediterranean.

Transpacific: Blank Sailings Fail to Rescue Rates

In complete contrast, the Transpacific market remains gloomy. The Shanghai-Los Angeles leg fell 7% (to $2,103/40ft) and Shanghai-New York dropped 5% (to $2,756/40ft). Carrier efforts to manage supply and demand appear ineffective.

Drewry observed: “According to Drewry’s Container Capacity Insight, blanked sailings on the transpacific tradelane increased this week and are projected to rise further, with 12 cancellations already announced for next week.”

However, the impact is limited: “Although carriers are increasing these cancellations to prop up falling spot rates, the strategy is struggling due to a lack of volume.”

The core cause lies in demand: “Since most Christmas inventory was already shipped in November, there is currently insufficient cargo to support freight rates. Consequently, Drewry expects rates to soften slightly in the coming week.”

GRI Outlook: Unlikely to Stick Amidst Off-Peak Season

Although carriers have announced General Rate Increases (GRI) ranging from $1,000 to $3,000 per 40ft for mid-December, the likelihood of success remains doubtful.

A representative from Freight Right shared: “We’re seeing a clear pullback in December booking activity.”

The reason cited is a shift in shipper behavior: “Many importer front-loaded earlier in the year due to tariff uncertainty, and aren’t replenishing heavily right now.”

He added regarding the macro context: “Combined with a broader cooling in consumer-driven shipments, the final weeks of the year are shaping up quieter than normal.”

And concluded on the rate hike potential: “When demand softens this sharply, GRIs tend to have limited staying power.”

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