Container rates diverge further

The international container market is showing a clearly divided picture this week. While rates from Asia to Europe continue to fall, prices on transpacific routes are rising sharply. The Drewry World Container Index (WCI) increased by 1% overall to $4,339 per 40-foot container. This limited movement in the global index masks significant differences between the main trade routes.On the Shanghai to Rotterdam route, the spot rate fell by 5% this week to $4,425 per 40-foot container. Rates to Genoa dropped by an even larger 8% to $5,080. The Freightos Baltic Index also confirms the downward trend: rates between Asia and Northern Europe fell by 8% over the past week, while Asia-Mediterranean rates declined by 7%.This suggests that the peak of the European high season has now passed. According to Freightos, rates to both Northern Europe and the Mediterranean have fallen by around 15%, or approximately $1,000 per 40-foot container, since peaking in early July. This puts prices roughly back at mid-June levels. At the same time, they remain around $2,000 per 40-foot container above levels seen before high-season demand began increasing in mid-May. However, a further sharp fall in prices does not appear inevitable for now. Congestion at major Asian ports and problems caused by low water levels on the Rhine are putting pressure on the logistics chain. Available capacity also remains relatively tight. Drewry reports only three blank sailings on the Asia-Europe route for next week.US routes become considerably more expensiveThe picture is very different on the other side of the market, where upward price pressure is evident. Drewry's Shanghai to Los Angeles rate rose by 6% this week to $6,244 per 40-foot container. Shanghai to New York increased by as much as 10% to $8,706. Shipping lines are actively restricting capacity through blank sailings: according to Drewry, ten sailings were cancelled both last week and the week before, with another seven cancellations planned for next week.Freightos is also seeing a rebound. Its Asia-US West Coast index rose by 11% over the past week. Daily rates were around $7,400 per 40-foot container this week, approximately $1,300 higher than at the beginning of August. On the US East Coast, Freightos reports that rates have now risen to around $9,400 per 40-foot container, a new high.The increase in US rates is notable because a sharp decline in import volumes after July had previously been expected. The US National Retail Federation has since revised its forecast towards a more even and relatively high level of demand through September. Importers may have extended their orders after a substantial increase in US import tariffs failed to materialise.Geopolitics puts a floor under freight ratesDespite falling European spot rates, the international logistics market remains vulnerable. Problems around the Strait of Hormuz and the Red Sea persist, while restrictions at the Panama Canal, congestion at Asian ports and low water levels on the Rhine are putting the reliability of sailing schedules under pressure.The Panama Canal in particular represents a significant risk heading into the autumn. The probability of a very strong El Niño has increased, which historically has been associated with lower water levels in Gatun Lake and consequently restrictions on canal capacity. At the same time, several shipping lines have announced surcharges for September on routes from Asia to the US East and Gulf Coasts via Panama.For the European container market, the underlying direction therefore remains downward for now. The early peak in the high season has passed and demand is declining, making it difficult for shipping lines to fully implement announced rate increases. At the same time, limited capacity, congestion and geopolitical risks mean a rapid return to the low freight rates seen before the high season is unlikely.The picture in the transpacific market is almost the reverse. Stronger-than-expected US import demand and active capacity management by shipping lines are once again creating upward price pressure. As a result, the global container index is barely moving, while the main trade routes continue to diverge.