Seatrade-Maritime: AI bubble boosts container utilisation and freight rates

Published by Seatrade-Maritime

In the permanent tango, waged more as a conflict than an expression of desire, demand and supply in the container sector are expected to settle on a compromise as AI demand partially compensates for weak consumer demand.

Consultant Jon Monroe noted that demand and spot rates are softening while capacity deployment is increasing, which points to second half of this year following a similar pattern to the last six months of 2025, which saw a prolonged softening of the market with rates declining and carrier returns falling too.

Current spot rates from Shanghai to Los Angeles have declined 6% to $5,878 per feu, while Shanghai to New York spot rates were down 4% to $7,598 per feu, due to increased capacity and easing demand, according to the latest World Container Index from Drewry Shipping.

“There are, however, compelling reasons to believe that freight rates could stabilize at levels above historical averages, even as significant new vessel capacity enters the market,” writes Monroe.

Acknowledging that forecasts, such as that from the National Retail Federation indicate weakening US imports, Monroe adds that there is much uncertainty and “The consumer is no longer king”.

Even as shops and restaurants are closing and the threat of more tariffs and further geopolitical disruption causing further disruption, with tariffs inflating consumer prices and conflict raising logistical costs, that should signal a softening market.

“This administration does not seem to get that tariffs impact the US consumer, not the factory. These cycles of front loading followed by slower demand have become a defining characteristic of the Transpacific market, making forecasting difficult for shippers, NVOCCs, and carriers.”

Undeterred by the referenced challenges Monroe, continues that the outsourcing of manufacturing is continuing to evolve to production centres that will favour the US East Coast and Gulf ports.

“The changes will require longer transits and increased reliance on regional shipping hubs such as Singapore and Columbo,” said Monroe.

To some extent the extended distances from the Far East to US East coast will mean excess capacity is reduced, though Monroe states that five top 10 carriers alone, MSC, ONE, CMA CGM, Evergreen and Cosco, have added 475,000 teu to the Pacific trades in the first half off this year alone.

According to Monroe there are “Compelling reasons” to think that spot rates could settle at a higher-than-average levels, even with the increased capacity.

“One of the fastest growing sources of cargo demand is the rapid expansion of artificial intelligence (AI) infrastructure. As technology companies invest billions of dollars in new facilities, manufacturers in China and throughout Asia are experiencing a surge of orders to build these facilities,” said Monroe.

In support of this view the consultant referenced a Chinese manufacturer that produces hoses for the auto industry who has seen an opportunity to produce similar parts for the AI industry which is transitioning to liquid cooled technology as the systems grow in size.

“He expects this business to surge for the next three years,” said Monroe.