Freight rates signal no rebound for the remainder of 2025

Container freight is facing persistent headwinds, as tariff adjustments, temporary trade relief, and early peak-season surges fail to sustain demand or support higher rates. Transpacific rates are approaching pre-Red Sea crisis levels, with overcapacity weighing on prices. Analysts warn that, despite recent tariff extensions, 2025 is set for continued weakness and declining freight rates.

US-China tariff pause fails to boost rates

Earlier this year, the US temporarily lowered baseline tariffs on Chinese exports from 145% to 30% for 90 days, prompting a surge in transpacific shipments. Spot rates to the West Coast spiked above $6,000 per 40ft container (FEU) as shippers rushed cargo ahead of the August deadline.

On August 12, the US extended the pause for another 90 days until November 10, easing US-China trade tensions. The development did not trigger another surge in shipments, unlike the spike seen in mid-May.

A recent Freightos poll of roughly eighty supply chain professionals highlighted divided sentiment: about half expect the tariff extension to create a small late-season bump, while the other half see the peak season as effectively over. Current container rates support the latter view.

Transpacific rates slide back toward pre-Red Sea levels

According to Freightos, transpacific rates to the US West Coast fell below $2,000 per 40ft container (FEU), marking their lowest level since the onset of the Red Sea crisis, which was around two years ago. Judah Levine, Head of Research, noted that rates falling back to levels last seen before the Red Sea crisis began—even as attacks continue—suggest that overcapacity is playing a role in rate behavior.

Xeneta’s weekly shipping update confirms the trend. As of August 20, US East Coast rates have fallen 17.3% over the past three weeks and are now at their lowest levels since late 2023. Peter Sand, Xeneta Chief Analyst, noted that rates are likely to decline further due to overcapacity and subdued demand, even though the pace of decline has slowed compared with July.

Meanwhile, Drewry’s World Container Index (WCI) also reported another decline on transpacific routes, with China–US West Coast rates falling 3% week-on-week to $2,412 per 40ft on August 21. Rates from China–US East Coast dropped 5% to $3,463 per 40ft.

Europe trade also under pressure

Asia–Europe routes are showing similar strain. Despite relatively better demand and congestion at key European ports, excess vessel capacity is keeping rates subdued. According to Freightos, carriers will reduce capacity on these lanes in September to try and keep prices from easing further.

Meanwhile, Drewry reported that China–Northwest Europe rates fell 6% week-on-week to $2,973 per 40ft on August 21, while China–South Europe rates declined 3% to $2,978 per 40ft.

Rates to remain soft through year-end

Analysts expect further gradual declines on transpacific lanes, while Europe trades will likely remain constrained by overcapacity. Temporary tariff relief and short-term surges have left carriers with excess capacity and shippers holding elevated inventories. Modest late-season increases could occur if importers resume bookings, but without a sustained recovery in trade volumes, ocean freight rates are expected to stay under pressure through the rest of 2025.