Asia-US Container Rates Decline Amidst Tariffic Uncertainties

Shanghai, China - Container freight rates for Asia-to-US services have experienced a downturn during the traditional pre-Lunar New Year slack season. However, several factors are influencing long-term price dynamics.

According to the Freightos Baltic Index, Asia-US West Coast rates fell 10% to $5,321 per forty-foot equivalent unit (FEU) for the week ending January 17. Asia-US East Coast rates declined 3% to $6,715 per FEU.

Judah Levine, head of research for Freightos, attributes the easing rates to the end of the Lunar New Year buildup. He also suggests that competition among carriers may have contributed to the decline.

Trans-Pacific prices may rebound after Lunar New Year due to a backlog of shipments. However, a similar surge is less likely for Asia-Europe as shippers moved goods earlier than usual this year.

Tariffic Concerns and Red Sea Ceasefire

Despite President Trump's threat of tariffs on Mexico and Canada, Levine believes a delay is possible under the International Emergency Economic Powers Act. A recent statement by Houthi rebels to cease attacks on merchant vessels in the Red Sea provides some hope.

However, Levine cautions that it may take time for ocean carriers and shippers to regain confidence in the Suez Canal route. The resumption of Red Sea transits is expected to take several weeks or longer and could impact schedules and vessel bunching, potentially leading to congestion and upward pressure on rates.

Long-Term Market Dynamics

In the long term, the redeployment of capacity diverted to the Red Sea is likely to exert downward pressure on rates. Levine suggests that some carriers may implement slow steaming or blank sailings to prevent a collapse in rates.

However, the influx of excess supply could result in loss-making prices, potentially dipping as low as $1,200 per FEU for trans-Pacific services and $1,000 per FEU for Asia-Europe and trans-Atlantic routes.