Several factors have contributed to this plunge, most notably the US tariffs and overcapacity in the shipping market. Of the former, container spot rates on headhaul trades spiked in May and early June as shippers front-loaded. However, by mid-July GRIs had failed to lift rates, while spot prices on Asia-US routes in particular fell steadily from around mid-June.
By early August, Asia-US rates had slumped by 58 per cent on the US West Coast and 46 per cent on the US East Coast compared to June. Although the 90-day pause in US tariffs provided a brief boost from late May to early June, it gave way as capacity exceeded demand. In response, carriers weren’t generally expecting a normal peak season and were instead blank sailing and reshuffling services – though that only stabilised rates temporarily, the report revealed.
In mid-August the drop in spot rates slowed partially, but gave way to a continued slip with more incoming vessels deepening the risk of overcapacity. That problem will persist globally throughout the remainder of the year with blanked sailings and cancellations likely as carriers try to prop up rates.
Meanwhile, macroeconomic headwinds made themselves felt through the summer, with global GDP and retail-sales downgraded, and PMI data suggesting that inventories were high amid dampened long-term planning – creating weaker demand overall.
ALCHEMPro News Desk (RR)
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