Ocean container rates from Asia continued to decline last week, dropping below 2024 lows due to a combination of factors, including a post-Lunar New Year demand lull, the impact of newly aligned carrier alliances, and capacity growth.
Rates on the Asia- Europe route fell 11% to US$2,740 per forty-foot equivalent unit (FEU), 14% lower than their 2024 low, while Asia- Mediterranean rates dipped 9% to below US$3,800/FEU, down 10% from last year’s nadir on the same route, according to a new Freightos analysis.
Tariff landscape "extremely uncertain"
"The post-LNY demand slump may be more pronounced than usual on these lanes as shippers stocked up ahead of the holiday to account for Red Sea diversion-driven lead time increases," Judah Levine, head of research at Freightos, said.
However, he noted that rates continue to decline despite congestion at several European ports, leading some carriers to propose General Rate Increases (GRIs) for April, although March increases saw limited success.
"There are indications of some frontloading-driven demand strength on the transpacific. Eventual tariff rollouts or enough inventory buildups would put an end to this pull forward and will likely mean a weaker than usual H2," Levine added.
The analysis noted that though the tariff landscape remains "extremely uncertain," federal agency findings that could lead to sharp tariff increases on China, reciprocal tariffs on a long list of countries, the USTR's proposed port fees on Chinese-made vessels, and the reinstatement of 25% tariffs on all Canadian and Mexican imports are due in early April.
Freighto said the U.S. Federal Maritime Commission also recently opened an investigation into foreign government roles in container chokepoints.
But despite the current relative demand strength, transpacific container rates continued to slide last week. Rates to the U.S. West Coast dropped to US$2,400/FEU and US$3,500/FEU to the East Coast, marking an 18% decline below 2024 lows.
Freightos suggests the rate weakness may reflect overcapacity, spurred by fleet growth originally tied to falling rates in 2023 but tempered by Red Sea diversions until now.
"In addition to the alliance reshuffle, the current rate weakness on these lanes may also point to fleet growth-driven overcapacity, first seen in collapsing rates in 2023 but largely held at bay since early last year by Red Sea diversions absorbing capacity," Levine said.
Looking ahead, analysts warn of further overcapacity as the market faces an eventual decline in demand when frontloading ceases.
"The expected demand drop when frontloading ends and analyses that – despite the current global benchmark rate still more than 70% higher than in 2019 due to the Red Sea crisis – the market will become oversupplied even if diversions continue may be reflected in reports of transpacific ocean contracts negotiations trending toward rates lower than carriers had hoped," the Freightos head of research added.
Air cargo rebounds slightly
Meanwhile, Freightos said in its analysis that Air Index rates for ex-China cargo showed signs of recovery last week, rising above US$5.00 per kilogram to the U.S. and over US$3.80/kg to Europe.
Transatlantic rates climbed to US$2.43/kg, up 15% since the start of the year.
The report suggests the increase may reflect frontloading ahead of anticipated U.S. tariff hikes on European trading partners, even as e-commerce demand to North America shows signs of easing.
