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Transpacific freight rates collapsed last week, wiping out nearly all the gains made since early November as soft demand and persistent overcapacity pressured carriers across the East–West trades. Asia–US West Coast rates slumped 32% week-on-week to $1,903/FEU, with daily assessments continuing to slide toward $1,800/FEU, barely above the yearly low of $1,400/FEU recorded in early October. Prices to the East Coast fell a further 8% to $3,443/FEU, retracing the increases driven by recent general rate adjustments, and remain near levels seen in early October before this latest round of GRIs.

Industry observers note that November’s GRIs have largely unravelled on the transpacific route as carriers struggle to hold rate levels amid subdued seasonal demand and a widening supply–demand imbalance. The current overcapacity on the East–West lanes—the same surplus that had earlier pushed West Coast rates temporarily to about $3,000/FEU—has now overwhelmed those increases, raising doubts over the success of the December GRIs.

In contrast, Asia–Europe and Mediterranean rates have held firmer at $2,457/FEU and $2,998/FEU respectively, with both lanes about 40% higher than in early October. Market participants attribute this relative stability to aggressive blank sailings during the contract tender season, which have helped preserve the October and November GRI gains. 

Even so, carriers continue to target further rate hikes in December, with some expecting spot levels to approach the $3,000–$4,000/FEU range. Beyond near-term pricing, attention is shifting toward the prospect of container traffic returning to the Red Sea as the Israel–Hamas ceasefire continues to hold. The speed of the transition back to the Suez Canal will be critical in shaping rate movements. A slower shift would minimize disruption, while a rapid return would create significant schedule turbulence for up to two months and add upward pressure on freight rates.

Timing would also be crucial as a transition during the lead-up to Lunar New Year, when demand naturally rises, would intensify port congestion and rate volatility; a post-festivities shift, when demand typically softens, would create far less strain on the network.

The Red Sea diversions had absorbed enough capacity last year to push East–West spot prices to $8,000–$10,000/FEU at their peak and set a much higher floor of $3,000–$5,000/FEU even during weak demand periods. But despite diversions still in place this year, rates have been consistently lower, with some lanes briefly touching 2023 levels in early October. 

Despite elevated tariffs earlier this year, US retail sales have remained resilient, with consumption expected to strengthen through the holiday season. A stabilised tariff backdrop and steady consumer spending could eventually support a restocking cycle in 2026 as frontloaded inventories unwind, offering a potential lift to demand.

For now, however, the market remains shaped by soft demand, surplus tonnage, and a looming surge in capacity once Red Sea diversions unwind. The viability of December rate increases will depend heavily on carriers’ ability to manage supply effectively in what remains an oversupplied global container market.

Written by: Aiman Haikal