While trans-Pacific shippers fatigued from the Great Tariff War step back, the market has seen a pause in plunging container rates just as the peak season is supposed to be getting underway.
Spot rates on various trade routes have seen dramatic shifts, said analyst Xeneta in a market update, reflecting broader industry challenges and responses.
Market average spot rates for container shipping on July 18 for the Far East to U.S. West Coast route stood at $2,313 per forty foot equivalent unit (FEU), while the rate to the U.S. East Coast is higher at $4,314 per FEU.
A deeper dive shows that West Coast prices have seen no change as of mid-July, halting a steep decline amounting to 28% over the first few days of this month. The U.S. East Coast rates have similarly seen a decline, dropping 7% since July 14, and a 26% fall since the end of June. Overall, the drop to the West Coast stands at 58% since peaking on June 1, whereas the rates into the East Coast decreased by 35% over the same timeframe.
These dynamics suggest shifts in trading priorities and logistical strategies. The notable variance between trading routes — the gap between the West and East Coast lanes — has inflated to $2,000, nearly double that on June 1, which was $1,155. This enlarged gap spotlights the pronounced economic adjustments facing these trades.
“Sentiment has turned and rates are falling despite the higher U.S.-China tariffs still being on hold, and the deadline for the rest of the world extended into August,” said Emily Stausboll, Xeneta’s senior shipping analyst, in a note. “Shippers can’t frontload forever, no matter what happens with the tariffs, so the longer term direction for rates was always going to be downward.”
Capacity reduction by carriers on trans-Pacific trades has somewhat mitigated weakening rates on U.S.-bound routes, yet carriers are fighting an uphill battle to stabilize rates further by year’s end.
The figures for Far East to North Europe and Mediterranean routes are $3,410 and $3,853 per FEU, respectively. Interestingly, the North Europe to U.S. East Coast route records a much lower average rate of $2,011 per FEU.
In contrast, the Far East to North Europe trade has experienced an 18% surge in spot rates since June and a 78% increase from late May. This rise is strongly tied to ongoing congestion at North European ports, driven by a spate of new high-capacity additions earlier this year, combined with labor disruptions and logistical hurdles like low water levels in the Rhine river. However, the Far East to Mediterranean trade diverges from this path, instead mirroring the downtrend mirrored in American markets.
“This is an ebb and flow of capacity across global supply chains as carriers seek out the higher rates, but by adding this capacity they risk ruining the party for themselves on the more profitable trades,” said Stausboll.
Find more articles by Stuart Chirls here.
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