Freight rates continue to fall, Asia-US routes buck the trend

Freight rates have continued their slide since mid-July, with Asia-Europe and Europe-US rates dropping further. Nevertheless, Asia-US rates rose this past week, driven by the looming US East Coast port strike set to begin on October 1. This potential disruption is expected to strain the shipping market further. Possible rate hikes to come in the transpacific route is also likely to offset the drop in the remainder of routes.

Drewry’s index falls again, but China-US routes see slight uptick

According to Drewry , the world container index decreased by 2% to $5,319 per 40ft container last week. Rates have fallen by a cumulative 10% since reaching a peak in mid-July.

China-US rates rise amid fears of port strike on October 1

Last week, rates from China to the US saw slight increases due to market concerns about a potential strike in the US. Accordingly, Harold Daggett, president of the International Longshoremen’s Association (ILA), is preparing his union to strike at East Coast ports starting October 1 if a satisfactory agreement is not reached with the United States Maritime Alliance (USMX) by September 30.

Drewry’s China to US West Coast route increased by 2% this past week to $6,401 per 40 ft container after declining for a total of 18% since mid-July. China to US East Coast also increased by 1% this past week to $8,811 per 40 ft container. The route declined by a total of 10% since mid-July.

“The recent uptick in transpacific Eastbound freight rates to the US West Coast and East Coast could be attributed to the looming ILA port strike on October 1 and the anticipated rush to ship goods before the strike begins. Therefore, Drewry expects rates on Transpacific trade to continue increasing in the coming weeks,” Drewry said on August 22.

Rates from China to Europe and Europe to US extend their slide

Drewry’s China to Northwest Europe route fell 4% last week and has decreased by 10% since mid-July to stand at $7,429 per 40-foot container. Meanwhile, the South Europe route dropped by 5% over the past week and 12% since mid-July, bringing the rate to $6,788.

Moreover, Northwest Europe to US East Coast rates declined by 1% last week to $1,934 per 40-foot container.

Freightos index points to more visible increases in transpacific routes

According to Freightos , the global container freight index increased by 2% this past week to $5,552 per 40 ft container with support from the sharp increases seen in China-US routes.

Rates from China to the US West Coast increased by 11% to $7,115 per 40-ft container last week. Meanwhile, rates to the US East Coast were up by 3% to $9,698. Both indexes rose more significantly compared to Drewry’s 1-2% increases.

On the other hand, other routes maintained their declines. Spot freight rates from China to North Europe declined by 4% this past week to $7,965 and by 3% for Mediterranean to $7,099 per 40 ft container.

US East Coast port strike could lead to severe cargo delays

A potential strike at US East Coast ports is expected to lead to cargo delays lasting weeks or even months. According to Reuters, retailers and importers are racing to get goods into the country before the union contract for approximately 45,000 dockworkers at 36 ports from Texas to Maine expires on September 30.

According to Sea-Intelligence CEO Alan Murphy, a 1-week strike in the beginning of October would not be cleared until mid-November. If it is a 2-week strike, then realistically, the ports would not be back to normal operations until 2025. Maersk also predicted that even a one-week shutdown could take 4-6 weeks to recover from, with significant backlogs and delays compounding with each passing day.

The future remains unclear

Freight rates have been gradually declining since their peaks in mid-July , though they remain significantly elevated compared to historical averages. Shipping disruptions, such as port congestion in Asia and the port strike in India on August 28, will maintain a floor under spot rates in the near term, and a potential strike at US ports could exacerbate these headwinds.