Topic of the week: Transpacific Rate Gains Wiped Out by Sudden Capacity Surge
After a brief period of optimism for ocean carriers, transpacific spot rates have taken a sharp downturn as a surge in available capacity floods the market. Earlier this month, rates from Asia to the US had begun to show signs of recovery, prompting some speculation that the trade lane was stabilising. However, that momentum has quickly been undone. Carriers have reinstated blanked sailings and introduced additional vessels that were previously delayed or held back, overwhelming demand and triggering another fall in rates. The shift reflects an ongoing challenge for the industry, where even small fluctuations in capacity can swing the market dramatically.
Part of the problem lies in weaker-than-expected demand, particularly from the US retail sector. Economic uncertainty and cautious consumer sentiment have led to slower inventory replenishment, leaving much of the new vessel space unfilled. As a result, some carriers have started to reduce allocations or adjust schedules to avoid further financial losses, but others are pushing forward in an attempt to defend market share. This fragmented response is contributing to the volatility, making it difficult for shippers and forwarders to plan effectively. With the contract season recently concluded, many are now questioning whether fixed agreements will hold their value if spot rates continue to slide.
The instability is creating operational headaches across the supply chain. Some forwarders report increased incidences of rolled cargo, not due to a lack of space, but because carriers are shifting priorities and managing yields more aggressively. The traditional peak season may bring a modest bump in volumes, but unless there is a significant and sustained demand increase, the overcapacity is likely to persist through the summer. Analysts warn that further rate drops could be on the horizon if carriers fail to demonstrate more disciplined capacity control in the coming weeks.
For shippers, the current landscape underscores the importance of maintaining flexibility in routing and contract strategy. A multi-modal approach, combining ocean with air or overland options where appropriate, can help mitigate risk as the market continues to fluctuate. Close collaboration with logistics partners and regular reviews of booking patterns will be essential for navigating what looks set to be another unpredictable quarter in the global freight market.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have increased by 9.2% from $5,488/FEU to $5,994/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have risen over the last two weeks, increasing by 10.7% to $7,098/FEU.
- Global container spot prices have risen over the last two weeks, and are now sitting at $3,704/FEU, a 9.03% increase over the last two weeks and a 44% decrease from spot rates this time in 2024 according to the Freightos Baltic Index (FBX).
Air:
- Global Air Freight spot rates currently sit at $2.22, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $1.85 (100-3000kg), says FAX, decreasing by 0.54%
- Europe to Asia, Greater China spot rates currently sit at $1.19 (100-3000kg), says FAX, increasing by 1.71%
That’s all for this week’s update…
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