Increasingly plunging container rates across the Pacific, as per the analysis of industry experts
The ocean container spot rates on the Far East to North Europe trade have decreased by 2% since July 31, while the decline on the Far East-U.S. route is more pronounced.
Overcapacity and Muted Demand Drive Down Rates on Far East-U.S. Route
The decline in ocean container spot rates on the Far East-U.S. route is primarily driven by significant overcapacity in the global container shipping fleet and muted demand forecasts after a peak driven by tariff-related frontloading earlier in 2025. Since June 15, the spot rate to the U.S. East Coast has decreased by 53%, and the spot rate to the U.S. West Coast has dropped sharply—over 60% since mid-June 2025—and continues sliding, hitting around USD 2,018 per FEU as of mid-August 2025, the lowest since late 2023.
Carriers have increased blank sailings to arrest the plummeting average spot rates on the trans-Pacific trade to the U.S. West Coast. As of August 1, the four-week rolling average of blanked sailings from the Far East to the U.S. West Coast has increased from 30,000 TEUs per week on June 22 to 57,000 TEUs.
Europe and Mediterranean Trades Maintain Higher Spot Rates
In contrast, other major global container shipping routes are experiencing different dynamics. The Far East to US East Coast rates have also declined significantly (down about 12-13% since late July), though they remain higher than West Coast rates due to longer transit times and somewhat tighter capacity.
The Far East to North Europe and Mediterranean routes have much higher rates, around USD 3,200 to 3,300+ per FEU, reflecting more successful General Rate Increases (GRIs) and some planned capacity reductions amid ongoing Red Sea shipping route complexities, which help sustain these northern hemisphere transatlantic and Europe-Mediterranean rates. The Mediterranean market shows signs that if capacity increases as expected, spot rates may also decline, but the overall demand appears steadier compared to transpacific trade.
Comparison of Key Factors
| Factor | Far East - U.S. Route | Other Major Routes (Europe/Mediterranean) | |------------------------------------|----------------------------------------------------|-----------------------------------------------------| | Demand | Muted after tariff-driven peak; no cargo rush | Relatively steadier demand, partially due to Red Sea diversions | | Capacity Management | Strong increase in blanked sailings to reduce supply | Capacity reductions planned but less aggressive | | Tariff Impact | Extended pause stabilizing demand short-term | Less tariff volatility affecting demand | | Rate Trajectory | Sharp decline (60%+ since June), lowest since late 2023 | Rates higher due to successful GRIs, up 14% recently| | Transit Times & Logistic Constraints | East Coast rates higher due to longer transit | Routes via Mediterranean/North Europe more complex but stable |
Observations and Speculations
Some observers speculate that China has been selling goods at drastic discounts to keep its factories running after U.S. tariffs amounted to an embargo with its most important trading partner. As of now, the spread in average spot rates on Far East trades to North Europe and the Mediterranean is near equal at $42 per FEU. Market average spot rates from the Far East to U.S. West Coast are currently $2,098 per forty foot equivalent unit (FEU), down 3% from July 31. Market average spot rates from the Far East to the U.S. East Coast are $3,311 per FEU, down 9% from July 31. The average spot rates from the Far East to the Mediterranean have declined a further 7% since July 31 and 26% since June 15.
Container volumes to Europe remained strong through much of the summer. Despite the decline in spot rates, it is uncertain how long this trend will continue, as the global container shipping industry grapples with overcapacity and evolving demand patterns.
The decline in spot rates for the Far East-U.S. route is also affecting the finance sector, as carriers struggle to manage their earnings due to the plummeting average spot rates. In contrast, the finance industry associated with the Far East to North Europe and Mediterranean routes remains relatively stable, given the higher spot rates and successful General Rate Increases (GRIs).
The pricing dynamics in the global container shipping industry are heavily influenced by spot rates. For instance, the current spot rate for the Far East-U.S. West Coast route is significantly lower than that of the Far East to North Europe and Mediterranean routes, impacting the transportation costs for businesses that rely on these routes.
The global container shipping industry's financial health is closely tied to the management of the supply chain. Overcapacity and muted demand are currently driving down spot rates on key routes like the Far East-U.S. route, posing challenges for carriers, while the industry tries to adapt and navigate these changing circumstances.
