Global container freight rates have sharply declined due to excess capacity and weak demand, impacting the shipping market significantly.
Global container freight rates fell sharply as excess capacity and weak demand weighed on the market, reported UK's Seatrade Maritime News.
Drewry Shipping Consultant stated that average box freight rates dropped by 10 per cent week-on-week. Analyst Simon Heaney forecast global growth at 1.8 per cent this year, noting that 2025 saw record contracting of 4.8 million TEU, pushing the order book to more than 11 million TEU, which is about one third of the active fleet.
Deliveries of containerships averaged 180,000 TEU per month last year, while demolitions totalled just 6,000 TEU. Drewry's World Container Index showed spot rates from Asia to the US West Coast down 12 per cent to $2,546 per FEU, and to the East Coast down 11 per cent to $3,191 per FEU. Rates to North Europe fell nine per cent to $2,510 per FEU, and to the Mediterranean eight per cent to $3,520 per FEU.
Analysts indicated that the Lunar New Year holiday beginning February 17 will further affect volumes. Dynamar's Darron Wadey noted that seasonal downturns have been common since 2022, often lasting months before recovery. The Shanghai Containerised Freight Index fell 7.4 per cent last week to 1457.86 points.
Wadey stated that the capacity overhang remains a major issue, with Cape of Good Hope diversions absorbed and new deliveries adding excess tonnage. He warned that even with cancelled sailings, overcapacity will deepen the downturn.
Dynamar described the market as atypical, with volatility being the norm and implications for supply chain stability. Xeneta's index showed smaller percentage declines but similar rate levels. Month-on-month capacity rose by 9.7 to 12.3 per cent on Asia-US and Asia-Mediterranean trades, while Asia-North Europe capacity fell by 1.9 per cent, likely due to port congestion. Transatlantic capacity dropped by 6.4 per cent.
