Shippers continue to fuel upward movement in trans-Pacific container rates as 2025 approaches, and there are likely more increases on the way.
While frontloading by importers looking to beat tariffs threatened by President-elect Donald Trump on China goods helped U.S. gateways to record volumes in November, prices aren’t expected to decline all that much amid a host of looming factors in the coming weeks.
Rates for containers moving from Asia to U.S. West Coast ports increased 8% to $4,825 per forty-foot equivalent unit, according to analyst Freightos’ Baltic Index for the week ending Dec. 27. Asia-U.S. East Coast prices increased 3% to $6,116 per FEU.
“Ocean rates out of Asia overall trended up slightly to end the year, but with Lunar New Year approaching and a range of January General Rate Increases (GRI) announced [by ocean carriers] for the trans-Pacific, container prices on these lanes could face upward pressure to start 2025,” said Judah Levine, head of research for Freightos, in a weekly update. “A seasonal decrease in demand starting later in February should see rates ease on the ex-Asia lanes, though Red Sea diversions will keep them elevated well above long term averages just as they were through 2024.”
Those diversions came as vessel operators sought to avoid attacks on merchant shipping in the Red Sea by Houthi fighters based in Yemen. Ocean services connecting Asia ports with destinations in Europe, the Mediterranean and the United States that had used the Suez Canal now sail on longer, more expensive voyages around the Horn of Africa.
Factories in Asia close for Lunar New Year, which begins Jan. 29 and continues through Feb. 12.
“Pre-Lunar New Year demand will combine with higher than normal volumes for this time of year into the U.S.,” Levine said. “And the post-LNY dip in volumes will likely be less pronounced than usual, too, as many U.S. shippers continue to frontload ahead of expected tariff increases.”
The pull-forward has been reflected in record November volumes at the ports of Long Beach and Los Angeles.
But Chinese exports to the U.S. have fallen since the start of the China-U.S. trade war in 2017, Levine said, to the point where Mexico has overtaken China as the top exporter to the American market.
“At the same time, Chinese investment in and trade with Mexico surged. And with Mexican tariffs usually lower than U.S. duties, the USMCA [United States-Mexico-Canada] trade agreement facilitating low-barrier trade between Mexico and the U.S., and the IMMEX program [Manufacturing, Maquiladora and Export Services Industry] allowing many imports destined for the U.S. to enter Mexico duty-free, many of these Chinese imports were arriving in Mexico as a channel to the U.S. market.”
China has been active in building port facilities and distribution centers in Mexico to aid nearshoring of U.S.-bound goods. But Levine noted that in response to Trump’s tariff threats, Mexican President Claudia Sheinbaum last week signed an act into law that immediately raises tariffs on apparel from China and other countries to as much as 35%.
“The act will also essentially close IMMEX to certain categories of textiles and apparel,” said Levine, “challenging importers who had relied on these methods to reduce their exposure to U.S. duties, including e-commerce sellers for whom INMEX was key to their decisions to import via Mexico.”
He added that in January, Mexico will also start enforcing stricter reporting requirements for business-to-consumer e-commerce imports.
In the trans-Atlantic, the Freightos index showed Asia to Northern Europe container rates increased 4% to $5,155 per FEU. Asia-Mediterranean prices fell 4% to $5,471 per FEU.
“Volume strength relative to last year, together with Red Sea-driven capacity reductions kept 2024 trans-Atlantic container rates above the loss-making lows seen in 2023,” Levine said, “with prices around the $2,500 per FEU level since October.
Rates dipped 10% for the week ending Dec. 27, Levine said, and carriers are announcing January disruption surcharges on the lane in anticipation of a possible midmonth strike at East Coast ports by the International Longshoremen’s Association.
“A prolonged strike would cause congestion and disruptions that could put additional upward pressure on East Coast lanes in January,” Levine concluded.
Find more articles by Stuart Chirls here.
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