Seatrade Maritime: Pacific container spot rates plunge ahead of contract season

As the annual contract season is about to start in earnest, traditionally carriers ramp up rates to boost their hand ahead of negotiations, and with a late Lunar New Year now should be the time to turbocharge freight costs.

Instead, the latest industry discussions are around how low spot rates can fall, particularly on the eastbound transpacific, where the latest weekly update from consultant Linerlytica, report that rates to the US West Coast are below $1,700 per feu compared to the last SCFI assessment at $1,801 per feu. 

“Rates as low as $1,400 per feu are being offered as the pre-Chinese New Year volumes to the US have been diluted due to the late holidays this year,” added the Hong Kong-based consultancy.

Drewry’s shipping points to the lack of traditional pre-Lunar New Year rush that has prompted carriers to blank 18, 27 and 28 sailings over the coming three weeks.

“A frequency much higher than in previous years,” noted Drewry, 

A similar effect is being observed on the Asia to Europe headhaul leg where container lines have committed to cancelling nine, 16 and nine sailings over the three-week period.

Chief Analyst at Xeneta Peter Sand said the current market average on the Pacific was $1,480 per feu, excluding terminal handling charges, but Xeneta’s mid-low rate, that is the lowest 25%, is at $1,207.

Sand said the continued softening of spot rates, particularly on the Pacific, will have “a sting in the tail,” as container lines look to stabilise the situation by aggressively cancelling sailings.

“If a shipper expects cargo to leave port on a certain date, they should factor the risk of that service being blanked – potentially at the last minute – and the subsequent ripple effects of delays on their supply chain,” said Sand.

He added: “Shippers may benefit from overcapacity if it forces lower freight rates, but if that overcapacity also causes increased blanked sailings, there could be an operational price to pay.”

The container shipping headhaul services out of Asia are affected by the Lunar New Year, which started in late January last year, 20 days earlier than this year, adjustments and recovery will necessarily have started earlier in 2025, points out Dynamar analyst Darron Wadey, who argues that the real test for market will be in March after the holiday season.

Having highlighted the caveats, Wadey then observed: “There is a clearly significant and underlying downturn in rates on the Pacific, with the year-on-year differences of such a magnitude, that there is much more at play than just a Lunar New Year adjustment.”

According to Wadey, Dynamar expects to see similar “rate index reductions” into March and beyond, and across multiple trade lanes.

“I expect capacity management will come in [we’re not noticing anything outside of the usual Lunar New Year adjustments just yet], but there is so much capacity running around, it will be a costly exercise for someone, somewhere,” concluded Wadey.