There are growing signs that a price war is breaking out in container shipping.
Consultancy Linerlytica is already warning that operating margins have already dropped below breakeven on several key routes with carriers still prioritising market share over profitability.
The Shanghai Containerized Freight Index and the China Containerized Freight Index have slipped by 70% and 50% respectively since their 2024 peaks.
Linerlytica said in its latest weekly report that it felt it was unlikely the planned mid-October rate hikes would succeed, given the lack of capacity cuts even as the market enters the slack season.
“Service withdrawals for the winter season announced so far have been negligible, which could portend further freight rate weakness in the 4th quarter,” Linerlytica argued.
Noting how freight rates have fallen below leading-cost operators’ breakeven for the first time since late 2023, Jefferies, an investment bank, warned weak spot rates threaten 2026 contract negotiations.
Leading-cost liner operators such as Maersk and Hapag-Lloyd carry all-in breakeven costs of roughly $1,100 per teu, according to Jefferies but mainlane spot rate averages are hovering at just over $1,000 per feu.
With talk of price wars breaking out, analysts at Sea-Intelligence said the race to the bottom this time around was different to other market downturns. Carriers are entering this downturn in a once-in-a-lifetime cash-rich situation, with the 2020s thus far having been the most profitable period in liner history.
“What happens when (not if) we see carriers engage in a price war, when at the same time they are not at immediate risk of running out of money?” Sea-Intelligence mused in its latest report, going on to question whether this will mean the drop into loss-making territory will be swift and very deep, but then rebound from a deep low point quickly. The alternative, according to Sea-Intelligence, is a “long, protracted war of attrition”, depleting the stockpiles of cash generated in recent years.
“The global supply/demand balance is structurally heading to a cyclical overcapacity,” Sea-Intelligence warned on Sunday.
So is there a price war? Not fully in the “everyone slashes rates in panic” sense yet — but many of the prerequisites are in place and being triggered. Liner shipping is very much in a price war adjacent space: intense competition, downward pressure on spot and contract rates, and rising risk for those slow to adapt.
