Container freight rates in standby mode: Price declines between Asia and USA

The traditional lead times in shipping before the Chinese New Year have weakened container freight rates for shipments from Asia to both U.S. coasts, while various factors are influencing prices in the longer term. According to the Freightos Baltic Index, rates from Asia to the U.S. West Coast fell by 10% to $5,321 per 40-foot container in the week up to January 17. Prices from Asia to the U.S. East Coast dropped by 3% to $6,715 per FEU. Judah Levine, Head of Research at Freightos, explains that the current declines are due to the temporary end of the pre-New Year lead phase from Asia. Additionally, newly forming alliances among some carriers are contributing to increased competition, which could impact prices. Shortly after the New Year, transpacific prices could rise slightly as a backlog of shipments has built up. The upcoming New Year, beginning on January 29, traditionally leads to stoppages in production at Asian factories. The lower rates follow preemptive movements by importers ahead of this holiday and tariffs threatened by President Donald Trump. Trump announced that the U.S. intends to impose 25% tariffs on imports from Mexico and Canada by February 1, though this may be postponed. Nevertheless, a possible agreement in the recently initiated negotiations between Hamas and Israel could lead to longer-lasting calm in the Red Sea, benefiting global shipping routes. According to Levine, the adjustment period to the shorter route for traffic from Asia to Europe, the Mediterranean, and North America could last several weeks or longer. Europe-bound routes are currently experiencing a price drop of 17% for Asia-North Europe to $4,694 per FEU, while Asia-Mediterranean prices fell by 7% to $5,283 per FEU. The emerging scheduling disruptions and vessel bundling in Europe and Asia could lead to delays in the near future, which might be mitigated in the long term if existing capacities return to the market after adjustments in the Red Sea.