Container shipping spot rates are experiencing a significant decline, influenced by the ceasefire in the Middle East and Chinese New Year celebrations. According to latest data from Xeneta, average rates from the Far East to Northern Europe stand at 3,795 dollars per 40-foot container, showing a 22% decrease since the start of the year. For the Mediterranean, the rate is 5,085 dollars per FEU, recording a 13% drop in the same period. Forecasts indicate further reductions between 5% and 10% starting from the first of February.
Routes to the United States are also showing a downward trend. Average spot rates from the Far East to the US East Coast declined by 7% in January, reaching 6,417 dollars per FEU, whilst for the West Coast they stand at 5,021 dollars per FEU, showing a 14% reduction. In the second half of January, these rates stabilised, but a further decline is expected, particularly for the West Coast.
Peter Sand, chief analyst at Xeneta, explains that the ceasefire in the Middle East does not immediately guarantee safe passage through the Red Sea for all container vessels, but it is sufficient to change market sentiment, influencing transport rates. The Chinese New Year celebrations must also be considered, which traditionally lead to a slowdown in container exports during this time of year, but there is no doubt that developments in the Red Sea situation are contributing to the decline in rates.
The analyst notes that in response to these dynamics, maritime carriers are taking measures to slow down the market decline through careful capacity management. On routes from the Far East to the Mediterranean, blank sailings will progressively increase, reaching a capacity of 38,900 TEU in the week of 24 February, marking a 318% increase compared to current levels. For the Northern Europe route, cancellations will reach 75,700 TEU by the same date, showing a 449% increase. Sand specifies that carriers will not remain idle while rates collapse and will do everything possible to maintain high rates, having refined their capacity management strategies in recent years.
The ceasefire between Israel and Hamas, which began on 19 January, is expected to last 42 days before entering its second phase, which could lead to a permanent peace agreement. Sand emphasises that February could be crucial for understanding how container shipping rates will develop in 2025. The Middle East ceasefire is set to enter its second phase and we will witness an increase in exports from the Far East in the first half of the month, after the Chinese New Year.
Sand adds that despite January's decline, it should be remembered that average spot rates are still notably high on routes from the Far East to Europe and the United States compared to the period before the Red Sea crisis, so they could still have considerable room to decrease. Carriers will find it extremely difficult to maintain high rates, especially considering the record number of vessels entering service, therefore we could witness a market collapse if there is a large-scale return to the Red Sea.
The analyst warns however that the situation is far from certain and we know how quickly and drastically the container shipping scenario can change. There is still a long way to go before a lasting peace agreement is reached in the Middle East and other geopolitical factors, such as Trump's tariff proposals, could come into play and exert upward pressure on transport rates.
