Container shipping rates continued to climb last week on major Asia-Europe and trans-Pacific trade routes, despite growing signs that demand is losing momentum. Port congestion, canceled sailings and operational uncertainty are helping carriers maintain higher prices, even as the peak shipping season fades.
According to an update from Freightos (NASDAQ: CRGO), the gradual resumption of Red Sea transits is also changing shipping schedules and creating new challenges for carriers. At the same time, the possibility of industrial action at the ports of Los Angeles and Long Beach is raising concerns among importers about potential delays and additional costs.
Red Sea reopening changes global shipping schedules
Container services are returning to the Red Sea at an ever increasing rate. According to Alphaliner data, almost two-thirds of the capacity deployed on the Asia-Europe lane is now operating on the lane.
In its analysis of the 10 largest carrier networks, 24 of the 46 services operating through the Red Sea accounted for 63% of the total deployed capacity. On Mediterranean routes the proportion is even higher at 70%, compared with 58% for services linking Asia with Northern Europe.
Israeli shipping company Zim also said it would return to the Red Sea via its joint Asia-U.S. East Coast service with Mediterranean Shipping Co. The decision is also particularly significant in view of the security situation in the region. As recently as August, Yemen-based Houthi rebels supporting Hamas in Gaza declared the Bab el-Mandeb Strait closed to ships with links to Israel.
But the return for the industry is tentative and uneven. Some shipping services have resumed using the Suez Canal westbound to Europe, but are still routing return voyages around Africa. This selective approach underscores security concerns that remain around the corridor.
Asian port congestion drives up freight prices
Weather disruptions are adding more pressure to an already beleaguered shipping network.
Typhoon Champi shut down operations in East Asia last week, with several Taiwanese container ports closed on Friday. Among the affected facilities were Kaohsiung, Keelung and Taipei. Ports in eastern China escaped serious disruption, and the storm weakened on its way to Japan.
Chinese container hubs are also still struggling from storms earlier in the summer. Major facilities are still not at normal operating levels, and congestion levels remain high.
These operational difficulties are helping to keep freight rates buoyed even when demand has slowed since the peak shipping season.
And the changing shipping patterns associated with the reopening of the Red Sea could add further complexity. Vessels that were previously on longer voyages around Africa may now arrive ahead of schedule. When multiple ships arrive at destination ports in a shorter time period, arrivals can become concentrated putting added pressure on terminals already working through existing backlogs.
Asia-Europe rates on the rise
Freight rates on the Asia-Europe lane have been rising since mid-October, aided by port congestion and carriers’ efforts to control available capacity through blank sailings.
Shipping lines are lining up for another round of price hikes in November, along with more cancelations to limit vessel space available. But the question is whether these gains are sustainable.
The Freightos Baltic Index recorded an Asia-North Europe rate of $3,551 per forty-foot equivalent unit (FEU) last week, up 3%. Mediterranean rates rose 8% to $4,252 per FEU.
Carriers also are adding to the number of canceled departures. There are eight blank sailings scheduled on Asia-Europe routes next week, compared with just two this week, Drewry said.
European freight forwarders said shipping lines continued to offer discounts to their published prices throughout October. Similar commercial concessions are expected to continue in November, which means that announced rate increases may not necessarily translate into higher prices for all customers.
Trans-Pacific rates rise despite signs of weaker demand
The trans-Pacific market has also recorded unexpected increases, contradicting expectations of a slowdown following China’s Golden Week holiday.
Freight rates from Asia to the U.S. West Coast rose by 3% to $8,368 per FEU. The increase was even more pronounced on East Coast services, where prices jumped 9% to $10,565 per FEU, marking their highest level of the year.
However, the upward movement on the East Coast has since moderated. Freightos reported that daily rates had declined but remained approximately $200 per FEU above the previous week’s level.
At the same time, forwarders are beginning to observe clearer signs of weakening demand. Cargo space is becoming easier to secure, suggesting that the market may be approaching a turning point despite the recent price increases.
Potential strike at Los Angeles-Long Beach threatens port operations
Beyond shipping rates, labor tensions on the U.S. West Coast represent another significant source of uncertainty.
Approximately 250 port watchmen at Los Angeles-Long Beach have authorized a strike that could begin on November 1 if negotiations over their labor agreement fail.
Although these employees represent only around 2% of the workforce affiliated with the International Longshore and Warehouse Union (ILWU), their responsibilities give them considerable operational importance.
The Pacific Maritime Association estimates that the terminals employing these workers handle approximately 85% of Long Beach’s cargo and 33% of Los Angeles’ cargo.
The employers’ association has warned that other ILWU members are not expected to cross picket lines established by Local 26. Such a response could interrupt vessel operations, container yard activities and gate movements at the affected terminals.
Negotiations are still ongoing, meaning that no work stoppage has been confirmed. Nevertheless, the possibility of a strike is adding pressure to an already congested port complex.
Any interruption would also risk worsening existing delays affecting containers awaiting rail transportation through Los Angeles-Long Beach.
U.S.-China trade actions add another layer of uncertainty
There are also looming deadlines for shipping companies and cargo owners tied to U.S. trade policy.
The White House in late September extended its trade truce with China, keeping in place existing arrangements on tariffs and other parts of the deal until early January.
But U.S. port fees targeting vessels tied to China are still scheduled to go back into effect on November 10.
Many in the maritime world had hoped for a postponement of these charges along with the broader trade truce, but the U.S. Trade Representative (USTR) has instead launched a public consultation on a possible delay until January.
This initiative shows that a postponement is being considered, but it does not mean that the scheduled fees are officially suspended.
The USTR also plans to wrap up its Section 301 probe of excess manufacturing capacity in China and 15 other countries by year end.
The findings could form a legal basis to restore tariffs at levels previously imposed under the International Emergency Economic Powers Act (IEEPA).
The Supreme Court decision that overturned tariffs imposed under IEEPA had produced replacement duties that left some countries, including China, at rates below the negotiated agreements.
Even if the probes are wrapped up by December, the ensuing public-comment period and hearing requirements could push the imposition of any new duties back by a couple of months.
This would usher in another period of uncertainty between publication of the findings and introduction of replacement tariffs.
What this means for importers and world supply chains
The latest developments show how complex the container shipping market is becoming. The return of vessels to the Red Sea offers the prospect of shorter transit times but that does not automatically mean lower freight costs or more predictable deliveries.
Shipping conditions continue to be affected by ongoing congestion at Asian ports, concentrated vessel arrivals, capacity management via blank sailings and potential labor disruptions in the United States.
Hence, the immediate challenge for importers is not only the freight rate level but also the difficulty in forecasting delivery schedules and total transportation costs.
Shippers moving cargo on major international routes will remain alert to changes in both the maritime operations and regulatory environment as further uncertainty over U.S.-China trade measures looms.
The relationship between subdued demand and ongoing operational constraints highlights that reduced cargo volumes are not a guaranty of more affordable or reliable container shipping.
