Global container spot rates continue their downward spiral, driven by a "more pronounced" post-Lunar New Year demand slump and shifting trade dynamics. Despite a slight easing in weekly declines, key Asia-Europe and trans-Pacific routes remain under intense pressure, forcing carriers to confront tough capacity decisions amid ongoing alliance network reshuffles.
Asia-Europe Routes: Steep Declines Defy Seasonal Norms
The latest Shanghai Containerised Freight Index (SCFI) revealed single-digit drops on major east-west lanes, with China-North Europe rates falling 2.5% week-on-week to 2,612per40ftandChina−Mediterraneanratesslipping4.52,612per40ftandChina−Mediterraneanratesslipping4.54,390 per 40ft. Drewry’s World Container Index (WCI) mirrored this trend, showing a 2% decline on the Shanghai-Rotterdam leg (2,463per40ft)anda12,463per40ft)anda13,268 per 40ft).
Freightos head analyst Judah Levin highlighted the alarming context: Asia-North Europe rates now sit 14% below 2024’s previous low, while Asia-Mediterranean rates are 10% under their floor this year. “This isn’t just a seasonal slowdown,” Levin emphasized. “Shippers front-loaded cargo before the Lunar New Year to offset Red Sea diversion delays, exacerbating the post-holiday demand vacuum.”
Trans-Pacific Plunge: U.S. Routes Hit Hardest
The pain intensified on Asia-North America routes, where the WCI recorded 9% and 7% weekly drops for Shanghai-Los Angeles (2,658per40ft)andShanghai−NewYork(2,658per40ft)andShanghai−NewYork(3,774 per 40ft), respectively. SCFI data echoed this weakness, with China-US West Coast rates down 5% and East Coast rates slipping 4%. The steep declines signal weakening U.S. consumer demand and inventory adjustments, even as Red Sea-related supply chain buffers fade.
Carriers’ Capacity Conundrum
Typically, carriers would respond to rate erosion with aggressive blank sailings. However, the industry’s ongoing transition to new alliance networks—slated for completion by late April—has complicated capacity management. “Blank sailings lose effectiveness mid-network overhaul,” noted a shipping executive. “We’re in limbo until the new structures stabilize.”
Analysts warn of tougher measures ahead if rates keep sliding post-network rollout. “Expect a surge in blank sailings if the Suez Canal remains blocked and demand fails to rebound,” said one consultant. Notably, even the resilient transatlantic trade succumbed to pressure this week, with WCI’s Rotterdam-New York leg dropping 2% to $2,316 per 40ft—its first decline in over a month.
Red Sea Ripple Effects Fade
The temporary demand boost from Red Sea diversions appears exhausted. With shippers no longer scrambling to secure early shipments, carriers face a double whammy: weakening volumes and persistent overcapacity. While new alliance networks promise operational efficiencies, their phased implementation leaves carriers vulnerable to short-term rate collapses.
Looking Ahead: A Precarious Balancing Act
As carriers navigate this inflection point, all eyes are on late April’s network finalization. Will streamlined alliances enable coordinated capacity cuts? Or will fragmented strategies prolong the rate hemorrhage? With Suez transits still disrupted and global trade flows in flux, the industry’s ability to align supply with softening demand will determine whether this slump becomes a rout—or merely a bump on the road to recalibration.
One truth remains undeniable: in a market where spot rates now sit 10-15% below previous annual lows, carriers’ margin buffers are evaporating fast. The countdown to decisive action has begun.