Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) increased 8% to $2,127/FEU.   
• Asia-US East Coast prices (FBX03 Weekly) decreased 3% to $3,069/FEU.
• Asia-N. Europe prices (FBX11 Weekly) increased 11% to $2,707/FEU.
• Asia-Mediterranean prices(FBX13 Weekly) increased 15% to $3,850/FEU.

Air rates – Freightos Air Index

• China – N. America weekly prices decreased 7% to $7.47/kg.
• China – N. Europe weekly prices increased 6% to $3.71/kg. 
• N. Europe – N. America weekly prices fell 1% to $2.51/kg.

Analysis

Transpacific ocean rates continued their Q4 trend of ups and downs last week with West Coast prices climbing 8% and $200 to $2,100/FEU as carriers increase blanked sailings during this low demand period to try and introduce – and hold on to, at least partially – General Rate Increases every two weeks. 

East Coast rates dipped 3% last week, but daily rates this week are up $300 to more than $3,350/FEU. As has been the case since mid-October, rates may retreat again somewhat in the near term. But a more sustained increase could be coming as we get closer to Lunar New Year. Even with the rises and falls though, carriers have succeeded in overall residual gains that have kept prices above year lows set in early October. 

More disciplined capacity management on the Asia – Europe lanes have kept rates climbing for much of Q4. But reports of increasing demand as Europe’s importers get an early start on pre-LNY orders now has volume strength supporting the latest GRIs too, with some carriers even restoring some announced blankings. Asia – N. Europe prices rose 11% to more than $2,700/FEU last week, and rates to the Mediterranean increased 15% to $3,850/FEU, with daily rates already above $4,000/FEU – both back to levels last seen this past summer.

This early start – also seen last year – is likely due to continued Red Sea diversions that, for shippers who don’t stock up enough inventory before the holiday, will mean a much longer than usual post-LNY wait to receive goods. 

But there are more signs that carriers are taking cautious steps toward resuming Red Sea transits. Maersk sent a vessel through the Bab el-Mandeb Strait late last week for the first time in more than two years, and stated that a few more sailings will follow as they test the feasibility of a full scale return. ONE also joined the group of carriers offering some Red Sea services, though through a charter slot agreement with regional carriers. Insurance premiums for Red Sea transits have fallen somewhat, but shipper concerns over exposure to risk and insurance costs are still a barrier to return, even when some carriers, like Hapag-Lloyd, are ready for a Red Sea trial run.

When Red Sea traffic does resume it will cause worse and significant vessel bunching and congestion at European hubs, and likely drive equipment shortages at Far East origin ports as carriers seek to shorten vessel time spent at berth. The shift back will be disruptive and cause delays and rate increases whenever it occurs, though the effect would be weaker if the return is in the low demand, spring months post-LNY and pre-peak season, and stronger if it coincides with peak season demand increases.

Once that congestion unwinds though, the Red Sea return will increase the amount of capacity available in an already oversupplied market. New vessel deliveries will decrease in 2026 compared to 2025, but the impact of the increase in supply on rates – even if Red Sea diversions continue – will likely be significant nonetheless, with higher levels of newbuild deliveries set for 2027 and 2028.

The Freightos Air Index shows China – US rates have started to come down from year highs as peak season comes to end, with prices falling 7% to $7.47/kg last week and daily rates down to about $6.50/kg. South East Asia – N. America rates are also starting to fall after climbing more than 20% to about $6.00/kg since mid-October. Overall transpacific traffic has proved resilient despite significant China-US volume drops following de minimis changes – and shifts of Chinese e-commerce tonnage to alternative markets –  as electronics volumes out of SEA, especially Vietnam, and Taiwan have grown due to tariff introductions.

China – Europe daily rates are at $3.86/kg, about level with earlier in the month and well below the $5.00/kg mark seen a year ago, with SEA – Europe prices at a year high of $4.15/kg, with daily rates easing.

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) decreased 6% to $1,964/FEU.   
• Asia-US East Coast prices (FBX03 Weekly) increased 8% to $3,150/FEU.
• Asia-N. Europe prices (FBX11 Weekly) decreased 1% to $2,449/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) decreased 1% to $3,342/FEU.

Air rates – Freightos Air Index

• China – N. America weekly prices increased 5% to $8.01/kg.
• China – N. Europe weekly prices decreased 4% to $3.50/kg. 
• N. Europe – N. America weekly prices increased 2% to $2.53/kg.

Analysis

Despite growing signs of ocean freight overcapacity, container rates on Asia – Europe lanes have maintained their increases from recent GRIs. 

Asia – Mediterranean rates were level last week at $3,342/FEU after climbing 15% to start the month for its fourth consecutive successful GRI since mid-October, before which prices dipped to a year low of about $2,000/FEU.  

Asia – N. Europe prices were stable last week at $2,449/FEU, and level with rates set in early November, but still well above its mid-October nadir of $1,700/FEU.  For most of the last two months rates on these lanes have climbed bi-monthly via capacity reductions as demand eased. But carriers and forwarders are now reporting an uptick in demand as some shippers are getting an early start to pre-Lunar New Year ordering – a trend also seen in Asia – Europe rate behavior in 2023 and 2024 when December prices climbed sharply, possibly in response to Red Sea-driven longer lead times.

Carriers are now increasing capacity to meet demand, with some planning mid-month Asia – Europe and Mediterranean GRIs to the $4,200/FEU and $4,750/FEU levels respectively. Through October, year to date Asia – Europe volumes were up 8.6% according to CTS. December demand is likely stronger than last year as well, with some speculating that some shippers are expecting a return to the Red Sea soon and are therefore building inventory buffers now in expectation of disruptions. But even with both Red Sea diversions still in place and volume growth, spot rates have consistently been lower than last year. Current Asia – N. Europe rates are down 54% compared to last December, pointing to capacity growth as an important factor to current price levels. 

On the transpacific meanwhile, even with capacity reductions – and additional blanked sailings announced for the coming weeks – carriers are having difficulty getting the series of recent GRIs to stick.  Last week West Coast rates retreated 6% from a start of the month GRI bump, to $1,963/FEU. Prices to the East Coast increased 8% to $3,150/FEU this week, but are down 15% from a month ago. Even with these ups and downs, though, carriers have succeeded in keeping rates above October lows of $1,400/FEU and $3,000/FEU respectively, likely with benefits of higher rates for short periods in between the dips. 

Slumping Q4 demand, in addition to growing fleets, is an important factor to rate levels, making planned mid-month GRIs unlikely to hold, and a more sustained rate rebound more likely only as we get closer to LNY. There are some indications that part of current demand levels is due to some US manufacturers pausing imports in the hopes that a Supreme Court decision invalidating IEEPA tariffs will come soon and result in lowered duties. Though the White House maintains that if IEEPA is struck down, it is ready to quickly restore tariffs by other means, some speculate that the administration – under growing pressure from cost of living concerns – could use a court decision against them as a tariff off-ramp.

Watch our recent 2025 Freight Year in Review and 2026 Lookahead webinar here.

But even with seasonal increases in demand in 2026 – and following an estimated 1.4%  decline for 2025 year total US ocean imports – S&P projects year totals in 2026 will fall 2% before a 6% rebound in 2027.

And slumping demand next year will coincide with capacity that will continue to grow. Though most of the new vessels are large and used on the main east-west trades, these new deliveries are also having knock-on effects on secondary lanes, like regional and feeder markets. As these new large vessels are introduced, older large vessels are being shifted to secondary lanes increasing capacity on these lanes, but also leading to an aging smaller-vessel fleet, which could set up a shortage of right-sized ships for these lanes even as total capacity grows. 

Capacity levels will be even higher once Red Sea diversions end.  But regardless of when carriers feel ready to resume traffic through the Suez, vessels won’t be able to return until vessel and cargo insurers also agree that the risk of attack has dropped sufficiently. Some experts suggest insurers will need at least another 60-90 days of quiet before considering a Red Sea return.

In other geopolitical developments, Mexico announced significant upcoming tariffs on many goods from countries with which they do not have trade agreements, including China. This step would be a blow to China, as Chinese exports to and investment in Mexico have grown sharply over the last few years. But despite this year’s trade war, China has shown export growth driven by diversification of trade partners.

In air cargo too, global volumes have grown from trade diversification even as changes to de minimis rules in N. America – including Mexico – have meant fewer e-commerce volumes entering those markets by air. 

But even on the transpacific, air demand has rebounded, if not fully recovered from the de minimis cancellations, both from some e-commerce recovery but also from significant general cargo growth from Vietnam as well as from China. IATA estimates that – after sharp e-commerce-driven 11% growth in 2024 – 2025 global air volumes will be 3.1% stronger than last year and that in 2026 demand will grow by 2.6%. 

As air peak season enters its final week Freightos Air Index China-US rates climbed to a year high of more than $8.00/kg, stretching past last year’s $7.30/kg peak, with South East Asia – US prices up to $5.50/kg from $5.00/kg in October. China – Europe rates dipped to $3.50/kg last week as capacity, following the fast growth in volumes, has shifted to this lane.

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) increased 22% to $2,096/FEU.   
• Asia-US East Coast prices (FBX03 Weekly) increased 2% to $2,930/FEU.
• Asia-N. Europe prices (FBX11 Weekly) stayed level at $2,464/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) increased 15% to $3,367/FEU.

Air rates – Freightos Air Index

• China – N. America weekly prices increased 18% to $7.63/kg.
• China – N. Europe weekly prices decreased 12% to $3.64/kg. 
• N. Europe – N. America weekly prices increased 2% to $2.48/kg.

Analysis

The past week has offered more signs of encouragement for a container market return to the Red Sea. In addition to the Houthis’ release of crew members held in Yemen since a vessel attack in July,  CMA CGM and its Ocean Alliance announced some of their services – escorted by French naval vessels – will now transit the Suez Canal for all backhaul voyages, with another also sailing headhaul via the Red Sea. 

None of these developments make a Red Sea rebound imminent however, and a full return could still be quite a ways off. But the eventual return of container traffic to the Red Sea will ultimately release a surge of capacity back into a market already struggling with oversupply. 

Transpacific container rates to the West Coast hit a low for the year of about $1,400/FEU in early October. Since then, carriers have sought to reduce capacity and introduce GRIs, resulting in a (relatively slow-moving) rollercoaster for prices on these lanes as supply-driven rates rise, retreat and repeat. 

Carriers were able to push West Coast rates up in mid-October and again to start November, resulting in an early-November climb to about $3,000/FEU only to see prices fall to $1,700/FEU by the end of the month.  

But prices ticked up again to start December – despite volumes projected to be the lowest of the year – with rates to the West Coast up 22% last week to $2,100/FEU. Some carriers are introducing smaller, incremental increases on a weekly basis as opposed to the more typical bi-monthly GRIs in the hopes that the market will accept smaller price bumps more easily than sharper increases. This trend may be reflected in daily rates for this week up another $100/FEU to $2,200/FEU to the West Coast and to more than $3,000/FEU to the East Coast, though once again this month there is skepticism that these prices will hold. 

Despite some observers expecting the US market to enter a restocking cycle that would spur ocean volume growth next year, others are less optimistic. The NRF anticipates retailer expectations for negative trade war impacts on consumer behavior will result in double-digit percentage year on year ocean import volume declines through April of next year, with demand lower than 2024 levels as well.

Trade war frontloading is partly to blame for lower US ocean import volumes now, and for the sharply negative year on year comparisons for those expecting weak volumes for Q1 2026. Europe’s ocean imports meanwhile  – especially as China has shifted focus away from the US and toward other markets including Europe – have been stronger and more consistent than N. America’s. CTS data shows total ocean imports to Europe eased 2% in month-on-month October, but were still 1% higher than a year ago. Asia – Europe volumes fell 3% year over year in October for the first annual decrease since February. 

Despite easing, slow-season volumes, carriers have had more success propping up Asia-Europe rates in Q4 than they have on the transpacific partly due to more aggressive blanked sailings as these lanes enter the home stretch of their annual ocean contract negotiation period. 

GRIs starting mid-October have pushed Asia – Europe rates up 40% to $2,463/FEU through last week, though prices have been level since late November. Asia – Mediterranean rates are up 56% to $3,366/FEU including a $500/FEU bump to start December. Some carriers have announced additional GRIs for mid-December, aiming to push N. Europe rates to $3,500/FEU and Mediterranean prices to $4,200/FEU or higher.

As the air cargo market enters its final peak season weeks, Freightos Air Index data suggests transpacific demand strength. China – US rates climbed from around $5.30/kg in mid-October to $6.50/kg to close November, and are now pushing past the $7.50/kg mark – above last year’s $7.30/kg peak – during the end-of-season rush. 

Demand is likely stronger on Asia – Europe lanes as China’s e-commerce export focus has also shifted to Europe. But the parallel shift of capacity away from the transpacific and to Asia-Europe lanes – also a factor in the current, higher transpacific rates – has kept Asia – Europe prices from spiking. China – Europe rates eased 12% to $3.64/kg last week and are about on par with a year ago. 

The EU and the UK have announced plans to close their de minimis exemptions within the next few years, with several countries planning handling fees for low value imports even before the rule change. US de minimis closures initially led to a sharp decrease in China-US e-comm air cargo volumes. And though volumes remain below April levels, some reports show much of that e-comm demand has returned to the China-US air market as e-commerce platforms have adapted to the new rules. 

Forwarders and BCOs rely heavily on tendered contracts in order to plan pricing for global ocean freight movements. But what if large swaths of the tendered contracts are simply completely irrelevant? Banking on joint research with the MIT Center for Transportation, this article challenges the basic assumption of tenders, makes a case for more strategic use of the spot market, and forces a hard, data-backed look at actual performance. 

There have been plenty of examples of volatility and disruption in freight markets over the last few years, from the pandemic and port strikes to the Red Sea crisis and trade wars. 

These events have triggered demand swings, impacted operations and lead times, and often sent freight rates climbing or plunging – all of which affect shipper and forwarder decisions on how to allocate freight volumes between contracts and the spot market.

Across modes, having a freight contract in place does not always mean shipments will get moved. Dr. Angi Acocella, a Freight Lab researcher at MIT’s Center for Transportation and Logistics, conducted research on procurement decisions and performance in the FTL market, and, via a joint survey with Freightos, on container shipping procurement as well. These studies explored how shippers make tendering decisions and provide insights on how to improve strategic procurement decisions across modes to reduce risk and costs and improve reliability.

See Dr. Acocella’s presentation of the survey results here. 

The studies show that:

• Both road and ocean shippers rely heavily on contracts – with most shipping at least 70% of volumes by tender – and mostly treat spot as a backup option. They also show that a significant share of contracts – on average 70% of FTL contracts  –  go unused.
• Unused lanes come with unnecessary costs, including a 7% year-on-year increase in contract rates, while the strategic use of spot for these types of lanes can mean significant savings in both time spent on wasted negotiations and in shipping rates.
• Index-linked contracts have also been shown to increase revenue for carriers and provide better reliability and lower costs for shippers.
• And digital tools that provide visibility of contract performance, market intelligence, and a dynamic channel to communicate and share information with LSPs are also key to optimizing the freight procurement process.

What follows are the key findings from these recent surveys and the best practices for freight procurement and tendering that emerge from the research. 

Are All Ocean Tenders Actually Used? The Findings

The surveys showed that in the FTL market, most shippers moved 90% of their volumes by contract with the remaining 10% going by spot. Ocean shippers also relied heavily on long term contracts, with more than half moving 70% of volumes or more via contracts. 

In both FTL and container, the spot market is mostly used as a backup to contracts. The move to spot is most often due to the uncertainty, unreliability or unavailability of the contracted capacity, or to unexpected swings in their own demand. Often these pushes to spot are triggered when spot prices become significantly out of sync with contract rates.

At the same time, 40% of shippers do report using the spot market as a first option on some lanes, usually for trades with infrequent, less predictable and lower volumes than contracted lanes. But this finding also means that 60% of ocean shippers rely on contracts even for low volume lanes.

Freight Lab research found a Pareto principle at work for FTL shippers: in general, about 20% of shipper lanes account for about 80% of their volumes, with a long tail 80% of lanes accounting for just 20% of – mostly low or inconsistent – volumes.

For many of those long tail lanes, however, volumes don’t materialize at all. Acocella refers to lanes with unused contracts as “ghost lanes,” and research shows that shippers underestimate how many contracts go unused.

A majority of both FTL and container shippers estimate a ghost rate of 25% or less. But FTL data suggests that on average, closer to 70% of contracted lanes go unused.

Ghost lanes come with added costs beyond the resources wasted negotiating unused contracts. MIT research shows that high rates of FTL ghost lanes one year resulted both in lower acceptance rates that year and in 7% higher contract costs – often at levels higher than spot rates – the following year as carriers  factor in a premium to compensate for unreliability.

The Actionable Insights

These findings – the volatility in these markets, the heavy reliance on contracts which can often become unreliable, the use of spot mostly as a second-choice backup, and the share of contracts that go unused – begged the key research questions: 

What is the optimal balance between freight contracts and spot shipments? What approach is most likely to maximize reliability and efficiency and minimize costs?

The resulting Freight Lab research produced the following key components to constructing an optimized contract/spot procurement portfolio*

*These results are based primarily on research for the FTL market, with applicability to ocean likely based on the above survey and with more research on this area underway now.

Learn from past performance: A look at contract portfolio and spot usage and performance – its mix, utilization and reliability by lane – from the previous year is critical to decision-making for the coming year. Shippers and forwarders should determine where contracts performed well, where they were underused (or not used at all), and price levels paid relative to the market.

Based on this picture, companies can determine where and with which LSPs to renew contracts on highly or regularly utilized lanes. For lanes where little or no volumes materialized shippers and forwarders should consider a strategic direct-to-spot approach, given the high costs of ghost lanes.

Respect the market cycle:  Shippers and forwarders should also consider where the market is in its cycle, and how contracts performed in previous instances of this phase. In tight markets it generally does not benefit shippers to negotiate hard for discounted contract rates as – often regardless of a shipper’s history with a given carrier – contract price competitiveness becomes the carriers’ priority. In soft markets, shippers have more leverage and should contract with their most reliable carriers. But here too, low-ball rates can often mean poorer performance, especially if market rates increase. 

Index link some contracts – Contracts linked to an index allow rates to fluctuate in some relationship to the spot market. Significant spot changes are a main driver of poor contract performance: when spot rates climb too high above a contract’s rate, carriers roll volumes or apply premiums. When spot rates fall too low, shippers no-show and shift to the spot market or renegotiate contract levels. 

Allowing a contract to float along with an index removes this incentive to deviate from the contract. And though index linking exposes carriers and shippers to fluctuations in revenue or costs, this risk can (either be accepted as the cost of reliable service/volumes, or) be hedged through derivatives called Forward Freight Agreements, effectively locking in contracted service at a set cost or revenue level even while paid rate levels may change. 

Learn more about index-linked contracts here.

Acocella advises shippers to pilot index linking with a carrier they trust and with whom they have an existing relationship, and on mid-volume lanes – especially where volumes may not be consistent throughout the year – to start. Once the concept is proven, this tool can be expanded to other lanes. Research in the FTL market showed that index-linked contracts, especially on these types of lanes, often resulted in carriers realizing higher revenue and shippers getting better reliability, and often lower costs than when using typical contracts or just spot.

Track performance – Shippers and forwarders should not only evaluate past performance during tendering season, but should monitor performance and utilization during the contract period too. Generating visibility of your contract (and spot) portfolio, and tracking where volumes are materializing and which contracts are being underused, will let shippers understand how carriers are performing and how they, the shippers, are performing as a partner. Understanding where you stand can help you adjust in real time rather than carry unnecessary costs or incur higher costs or poorer reliability down the road.

Leverage tech – New tech tools help evaluate past performance or track the current status of freight tenders, costs, volume (or lack thereof) by lane, and spot usage, all of which is crucial to optimizing freight portfolios. 

These tools also represent the opportunity for a significant leap in freight procurement efficiency: Beyond digital tools that help shippers compare their contract portfolio to market prices and provide market intelligence to support decision making, logistics tech is also enabling more efficient tendering by creating a dynamic, digital channel to communicate, negotiate, share data, and even make spot or contracted bookings with LSPs. 

Tech that simplifies or automates parts of the freight procurement process, or otherwise reduces the time spent on negotiations and procurement, is increasingly key to overall streamlined procurement.

The Bottom Line: Don’t Tender Everything

Recent research shows a heavy reliance on long-term contracts for both road and ocean freight shippers, with the spot market mostly reserved as a backup. But shippers also carry significant wasted costs through unused or underutilized contracts, with analysis showing better efficiency via the strategic use of spot for these lanes. 

These studies suggest certain key procurement best practices for shippers, including investing in visibility of their contract/spot portfolio and performance; the strategic use of spot on low volume lanes; consideration of the current phase in the market cycle; implementation of index-linked contracts, and leveraging digital tools to provide that necessary visibility as well as automate or digitize time-consuming tasks like requesting tender offers, spot rates and even placing bookings.

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) decreased 10% to $$1,715/FEU.   
• Asia-US East Coast prices (FBX03 Weekly) decreased 17% to $2,863/FEU.
• Asia-N. Europe prices (FBX11 Weekly) stayed level at $2,467/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) decreased 2% to $2,930/FEU.

Air rates – Freightos Air index

• China – N. America weekly prices stayed level at $6.49/kg.
• China – N. Europe weekly prices increased 4% to $4.14/kg. 
• N. Europe – N. America weekly prices increased 5% to $2.44/kg.

Analysis

Last week, statements by the Suez Canal Authority indicated that Maersk’s return to the Red Sea was imminent. Maersk quickly denied they had set a date, and now it appears all the excitement may have been mostly a misunderstanding, though there are signs that Maersk is at least dipping some toes back to the lane through third parties.  

So a Red Sea rebound may not be coming as soon as it seemed a few days ago, but a return is likely still closer than it has been for the last two years. The resumption, whenever it occurs, will cause congestion at European hubs – where congested ports are leading some carriers to already adjust port call plans – during the transition back before releasing significant amounts of capacity back into rotation and adding downward pressure on rates once schedules normalize. 

You can see our full analysis of a Red Sea rebound here.

Even before a Red Sea reset, there are already signs of growing overcapacity in the market. This fleet growth even with Red Sea diversions still in place has meant lower container rates year on year for most of 2025.

Transpacific rates fell further to close November, with West Coast rates down 10% to $1,715/FEU and East Coast rates easing 17% to $2,863/FEU. These dips brought transpacific prices within a couple hundred dollars of year lows after climbing on mid-October and early November GRIs Demand is estimated to be at its lowest since early 2023, but supply side growth is also contributing to lower rates. Daily rates this week are trending up though, which could signal another GRI attempt to start December.

More aggressive capacity management on Asia – Europe lanes are likely responsible for carriers succeeding to maintain October and November GRIs on these trades. Prices were level last week at about $2,500/FEU to Europe and $2,900/FEU to the Mediterranean. Daily rates to the Mediterranean are up to about the $3,400/FEU level so far this week suggesting a GRI push, though prices to Europe have stayed about level. New EU emissions surcharges will mean higher costs to carriers on these lanes that will start to be passed on to customers in January. 

Severe storms in South East Asia last week disrupted ocean and air freight operations in countries including Sri Lanka, Thailand, Vietnam and Malaysia. Of these, Sri Lanka may have been the hardest hit, with delays reported at the Port of Colombo as services restart. 

Also late last week, Airbus grounded 6,000 of its A320s for a critical software update with a hardware fix needed for about 1,000 of these aircraft. Most vessels were updated and returned to service over the weekend, with no significant delays reported yet. FedEx and UPS have grounded their MD11s following a deadly crash, and though FedEx anticipated a rapid inspection process, aircraft are taking longer than expected to get back in the air.

The US cancelled its de minimis exemptions over the summer driving a significant reshuffle of e-commerce air cargo volumes and capacity over the last few months. The EU has committed to revoking its de minimis rules by 2028, though it may do so as early as next year.  The UK has now also decided to terminate the exception. But with a later target date of 2029, there is concern that an even stronger surge of e-comm goods could enter the country once de minimis to the other major markets close. 

Freightos Air Index rates to Europe climbed 4% to $4.14/kg out of China last week and were about level at $3.67/kg out of South East Asia.  China – N. America prices were level at $6.50/kg last week but show signs of increases this week as peak season enters its home stretch. SEA – N. America rates are at about $5.50/kg so far this week.

Freight Market Insights

Ocean shipping is a crucial component of global trade ensuring the smooth and effective movement of goods from manufacturers to consumers. By volume, about 90% of goods traded globally are shipped by sea, with most of those goods by value, sailing in containers. Keep reading for this month’s ocean and air update, or stay up to date on a weekly basis with our weekly update available here.

Ocean Rates Recover Even in Late-Year Lull

October featured rising trade war tensions between the US and China, including mid-month reciprocal roll outs of port call fees for US and Chinese vessel arrivals at Chinese and US ports, respectively, and a Trump threat of 100% tariffs on China starting November 1st.   

But following a much anticipated end of month Trump-Xi his meeting, President Trump  announced that the US will reduce fentanyl-related tariffs on China from 20% to 10%, extend the reciprocal tariff pause for a year and postpone USTR port call fees, with China also postponing its port fees and agreeing to other concessions.

This deescalation puts US tariffs on China back to March levels. These moves may be unlikely to spur a sudden surge in transpac freight demand, but do mean that supply chain stakeholders have more certainty and stability regarding the tariff landscape than at any point so far in 2025.

Trump also announced trade deals with Malaysia and Cambodia late in October while establishing frameworks with Vietnam and Thailand, generally featuring 20% US tariff baselines with various exemptions in exchange for reduced barriers to US exports and investment/purchase commitments, likewise leading to a firmer tariff landscape than earlier in the year.

Despite soft post-peak season demand leading rates to slump to year-lows by mid-October, East-West container rates rebounded mid-month on GRI gains, supported by significant blanked sailings.

Transpacific rates to the West Coast increased 40% in the last two weeks of October to $2,000/FEU, 16% to the East Coast to $3,500/FEU, with Asia-Europe prices climbing 30% to close the month at $2,270/FEU.

Rates on these lanes rebounded to mid-September levels and now exceed October 2023 prices after dropping to about pre-Red Sea crisis levels mid-month, with carriers potentially introducing additional GRIs for November. 

Even with these rate gains however, prices remain 40% to 60% lower than a year ago. Red Sea diversions absorbing capacity were credited as the main driver of highly elevated rates last year. That rates are falling even while Red Sea diversions continue points to capacity growth as an important factor for current rate levels

Air Rates Climbing, Despite Peak Season Skepticism

China – US Freightos Air Index air cargo rates climbed 10% in the last two weeks of October to $5.64/kg – their highest sustained level since March – possibly driven by Trump’s Nov. 1st 100% tariff threat. Some experts are skeptical there will be much of an air peak season this year due to trade war frontloading and impacts on e-commerce volumes. But if climbing rates do signal the start of the seasonal rush, it is muted compared to a year ago when prices were already at about $7.00/kg. South East Asia – N. America rates have climbed 3% in the last few weeks to $5.14/kg. Transatlantic rates have increased 9% to $1.85/kg, their highest level since June.

China – Europe prices are up 7% over the last month to about the $4.00/kg level and on par with last year despite reports of significant year on year volume increases on this lane, while SEA-Europe rates are up 13% to $3.55/kg. Climbing rates may indicate the start of peak season demand on these lanes, but rates on par with last year despite volume growth may reflect that capacity is shifting to where the volumes are too.

Understanding the Freight Market & Trends

Multiple factors can impact operations and rates in the container shipping market.

Increases in consumer demand for goods leads to increased demand for ocean freight and can put pressure on operations and lead to higher prices as space on vessels fills up.

Examples of drivers of increased demand include typical seasonal increases like those that occur most years during the ocean peak season from about July to October to build inventory for shopping events from back-to-school through the holiday season.

But demand can also be driven by geopolitical factors like trade wars that push shippers to increase orders before new tariffs go into effect, or unique events like the pandemic that drove consumers to shift spending from services to goods as they were stuck at home.

An increase in demand and container traffic can often lead to congestion at ports, which also tends to delay vessels and reduce effective supply in the market. Congestion for other reasons – like bad weather, labor strikes that create backlogs, or unusual events like the blockage of the Suez Canal in 2021 or the Red Sea diversions in 2024 – can also lead to backlogs and congestion.

Together, increases in demand or port congestion (and the two often occur together) put upward pressure on freight rates until demand declines and/or congestion eases. Ocean carriers will increase rates by announcing General Rate Increases (GRIs) for prices on a given lane, or adding to the existing base rate through different surcharges like a Peak Season Surcharge or Port Congestion Fee.

When demand for shipping decreases, freight rates generally drop as well. Again, demand can decrease seasonally during the non-peak months of the year, or can be driven by macroeconomic factors like recession or inflation.

Carriers will try to nonetheless keep vessels reasonably full and freight rates at profitable levels by reducing capacity through decreasing the number of vessels they operate by canceling, or “blanking” scheduled sailings. Downward pressure on rates can also happen if the global fleet has grown through the building of new vessels but more quickly than demand has expanded.

The container market is considered quite a volatile one, and plenty of examples even from the last few years demonstrate that unexpected changes in demand, spikes in port congestion, or geopolitical events can disrupt operations or send freight rates spiking.

This volatility makes staying on top of trends in the market all the more important to logistics stakeholders committed to making informed decisions and creating strategies for supply chain resiliency even in times of disruptions.

Key Factors Affecting the Freight Market

As noted, multiple factors can impact the container freight market by driving changes in the supply of available capacity or demand for container shipping. These include:

Seasonal demand increases from July to October in advance of consumer events and in the lead up to the Lunar New Year holiday in China – usually in February – as shippers pull forward a few weeks of demand before manufacturing pauses over the holiday break.

Increases/decreases in consumer spending linked to general economic growth or recession or by unforeseen factors like the boost to consumer spending on goods during the pandemic.

Geopolitics can change freight dynamics too. Trade wars that result in tariffs can lead to a rush of importing activity before the tariff is rolled out. Blockages of waterways, like in the Red Sea, can also impact freight costs by causing the market to adapt.

Port congestion reduces the available supply of container capacity as vessels wait for a spot to open at a port. Congestion can be caused by bad weather, labor strikes, or even just a big enough increase in demand and traffic that can cause a backlog at ports.

Fleet growth – Ocean carriers need to determine in advance how many new vessels to order and sometimes the growth of the fleet can outpace the growth in demand. When this happens, carriers face downward pressure on rates as the market is oversupplied.

The volatility of the international freight market makes staying on top of trends in the market all the more important.

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As the fragile but still-in-place Israel-Hamas ceasefire nears the two-month mark, and with the Houthis declaring an end to attacks on passing vessels, there is more and more anticipation that the long-awaited return of container traffic to the Red Sea may be coming soon. 

Though Maersk maintains it has not set a date, the Suez Canal Authority stated that Maersk will resume transits in early December. ZIM’s CEO recently stated that a return in the near future is increasingly likely, and CMA CGM is reportedly preparing for a full return in December.

Operational Impact

The shift of most of the 30% of global container volumes that normally transit the Suez Canal away from the Red Sea and around the Cape of Good Hope almost exactly two years ago added seven to ten days and thousands of nautical miles to Asia – Europe journeys and to some Asia – N. America sailings as well. 

The return of container traffic to the shorter Suez route will result in the sudden early arrival of these ships, which will mean significant vessel bunching and congestion at already persistently congested European hubs. This congestion will cause delays and absorb capacity which could push container rates up on the affected lanes, and possibly beyond. 

The shift back through the Suez Canal may initially keep some of the typically lower volume ports in Europe that have become transhipment centers during the Red Sea crisis, like Barcelona, busy while carriers may omit port calls at some of the congested major hubs. But after the unwind, these ports, as well as African ports that have been used as refuelling stops during the last two years, will see port calls decline.

Carriers have plans for a gradual phase in of the transition back to the Red Sea, with smaller vessels starting to transit first. This approach would still cause vessel bunching, but would be aimed at minimizing the impact of the reset as much as possible.

But some carriers are skeptical that an orderly phase-in will happen, as they expect pressure from customers who will want a return to the shorter route as quickly as possible. Analysis from Sea Intelligence suggests that the more gradual the transition, the less disruptive it will be, while the faster the return the more disruptive it will be during the up to two months it will take for schedules to return to normal. 

Ocean expert Lars Jensen also notes that a return during the lead up to Lunar New Year would coincide with an increase in demand, and would put more pressure on ports and rates than if the transition takes place post-LNY when demand is typically weak. With carriers signalling the shift will begin in December and pre-LNY demand probably picking up in mid-January next year, it seems likely the two will coincide. 

Implications for Capacity – and Rates

Red Sea diversions were estimated to have absorbed about 9% of global container capacity by keeping ships at sea for longer and – with longer journeys meaning vessels would arrive back at origins days behind schedule – via carriers adding extra vessels to services in order to maintain planned weekly departures. 

This drain on capacity caused Asia – Europe rates to more than triple and transpacific rates to more than double in the two months from the time the diversions began to just before Lunar New Year of 2024. And though rates moved up and down along with seasonal changes in demand, the capacity drain pushed East-West rates up to 2024 highs of $8,000 – $10,000/FEU and set a highly elevated floor of $3,000 – $5,000/FEU during low demand periods that year. 

But even with Red Sea diversions continuing to absorb capacity in 2025, continued fleet growth through newly built vessels entering the market has meant that the container trade has already become significantly oversupplied.  

As such, rates on these lanes – even before the capacity absorbed by diversions has re-entered the market – have consistently been significantly lower than in 2024 even during months when volumes have been stronger, with prices on some lanes reaching 2023 levels for a span in early October. Recent carrier struggles maintaining transpacific GRIs point to this challenge already.

Even with Red Sea diversions continuing and even during months in 2025 with stronger year on year volumes, capacity growth has meant rates in 2025 have been lower than in 2024.

Yes, the initial congestion and delays caused by the transition back to the Suez Canal will at first put upward pressure on rates for Asia-Europe containers and probably to a lesser degree on the transatlantic lanes as well. If the congestion ties up enough capacity or impacts operations at Far East origins, the rate impact could spread to the transpacific as well. As noted above, if the return coincides with the lead-up to LNY, it will have a stronger impact on rates as there will be pressure from the demand side as well. 

But once the congestion unwinds and container flows and schedules stabilize the shift will ultimately release more than two million TEU of container capacity back into the market.  This surge will put even more downward pressure on rates and increase the challenge of effectively managing capacity for carriers seeking to keep vessels full and rates profitable in 2026.

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) decreased 32% to $1,903/FEU.   
• Asia-US East Coast prices (FBX03 Weekly) decreased 8% to $3,443/FEU.
• Asia-N. Europe prices (FBX11 Weekly) decreased 1% to $2,457/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) increased 6% to $2,998/FEU.

Air rates – Freightos Air index

• China – N. America weekly prices decreased 2% to $6.50/kg.
• China – N. Europe weekly prices decreased 1% to $3.97/kg. 
• N. Europe – N. America weekly prices increased 1% to $2.33/kg.

Analysis

Despite higher tariffs since early this year, US retail sales have proved resilient and are expected to grow through the holiday season. The solidifying tariff landscape is nonetheless facing destabilizing forces like recent China-Japan tensions, and the US Supreme Court’s pending decision on the legality of Trump’s IEEPA-based tariffs. 

But the White House is signalling it is already taking steps to ensure that a SCOTUS loss will not open a low tariff window.  So, if consumer spending remains strong, and the status quo of the trade war holds up, the US could enter a restocking cycle in 2026 as frontloaded inventories wind down. This restocking could mean stronger freight demand than some have anticipated for next year.

On the freight supply side though, there is more and more discussion of container traffic’s coming return to the Red Sea as the fragile Israel-Hamas ceasefire remains in effect. And while most carriers are not offering a timeline, ZIM’s CEO recently stated that a return in the near future is increasingly likely. 

The shift of most of the 30% of global container volumes that normally transit the Suez Canal away from the Red Sea and around the Cape of Good Hope almost exactly two years ago added seven to ten days and thousands of miles to Asia – Europe journeys and to some Asia – N. America sailings as well. 

The return of container traffic to the shorter Suez route will result in the sudden early arrival of these ships, which will mean significant vessel bunching and congestion at already persistently congested European hubs. This congestion will cause delays and absorb capacity which could push container rates up on the affected lanes, and possibly beyond. 

Carriers have plans for a gradual phase in of the transition back to the Red Sea, with smaller vessels starting to transit first. This approach would still cause vessel bunching, but would be aimed at minimizing the impact of the reset as much as possible. 

But some carriers are skeptical that an orderly phase-in will happen, as they expect pressure from customers who will want a return to the shorter route as quickly as possible. Analysis from Sea Intelligence suggests that the more gradual the transition, the less disruptive it will be, while the faster it is the more disruptive it will be, and the more pressure it will put on freight rates during the up to two months it will take for schedules to return to normal. 

Ocean expert Lars Jensen also notes that a return during the lead up to Lunar New Year would coincide with an increase in demand, and would put more pressure on ports and rates than if the transition takes place post-LNY when demand is typically weak.

The capacity absorbed through Red Sea diversions pushed East-West rates up to highs of $8,000 – $10,000/FEU in 2024 and set a highly elevated floor of $3,000 – $5,000/FEU during low demand periods that year. But even with Red Sea diversions still in place this year, rates on these lanes have consistently been significantly lower than last year, with prices on some lanes reaching 2023 levels for a span in early October.

The transition back to the Suez Canal – be it more or less chaotic – will ultimately release more than two million TEU of container capacity back into the market.  This surge will put even more downward pressure on rates and increase the challenge of effectively managing capacity for carriers seeking to keep vessels full and rates profitable. 

The current overcapacity on the East-West lanes is the main reason that carriers’ November transpacific GRIs which had pushed West Coast rates up by $1,000/FEU this month to about $3,000/FEU have now fizzled. 

Asia – N. America West Coast prices fell 32% last week to $1,900/FEU with daily rates this week down another $100 so far, but prices remain above the $1,400/FEU low for the year hit in early October. Last week’s vessel fire at the Port of LA does not seem to have had an impact on prices as operations have quickly recovered. Rates to the East Coast fell 8% to $3,400/FEU last week but are at $3,000/FEU so far this week, about even with levels in early October before these set of GRI introductions.

Meanwhile, October and November’s GRIs on Asia-Europe lanes have stuck, with rates to Europe and the Mediterranean both 40% higher than in early October at $2,500/FEU and $3,000/FEU respectively.  These rate gains may be surviving on aggressive blanked sailings on these lanes. 

Carriers are planning additional GRIs for December aiming for the $3k-$4k/FEU level as they continue to reduce capacity – with an announced labor strike in Belgium likely to help absorb some supply –  but there are signs that these increases may not take.

In air cargo, peak season demand is driving rates up and should keep doing so for the next couple weeks. Freightos Air Index data show ex-China rates remaining strong at about $6.50/kg to N. America and $4.00/kg to Europe last week. Demand out of S. East Asia has grown significantly during this year’s trade war, with rates also elevated on these lanes at $5.40/kg to the US and $3.50/kg to Europe.

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) fell 6% to $2,793/FEU.   
• Asia-US East Coast prices (FBX03 Weekly) increased 6% to $3,734/FEU.
• Asia-N. Europe prices (FBX11 Weekly) decreased 1% to $2,480/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) were level at $2,827/FEU.

Air rates – Freightos Air index

• China – N. America weekly prices increased 5% to $6.60/kg.
• China – N. Europe weekly prices increased 2% to $4.01/kg. 
• N. Europe – N. America weekly prices increased 6% to $2.31/kg.

Analysis

The Trump administration – with the Supreme Court decision on the validity of its many IEEPA-based tariffs looming – announced additional tariff exemptions last week, focusing on agricultural products not produced in the US but also including beef, as the White House seeks ways to address cost of living concerns. The administration also announced frameworks for trade agreements with several South American countries and Switzerland. 

Since October, container carriers have been contending with downward pressure on rates from both the seasonal lull in demand and growing capacity on the major East-West trades. Nonetheless, driven by significant steps to reduce capacity, they succeeded in pushing through mid-October GRIs that rescued rates from two-year lows, and pushed prices up again with November 1st rate increases.

But as we pass November’s midway point, transpacific rates have started to decrease sharply.  Prices to the West Coast fell 6% last week, but daily rates so far this week have slipped more than 20% to about $2,100/FEU, erasing the November gains and, for now, back at about their mid-October GRI bump level. 

East Coast daily prices have also fallen by more than 20% so far this week to about $3,000/FEU, back to pre-October GRI levels. Some carriers have December GRIs planned, but they may reconsider given this week’s sharp retreat.

Asia – Europe and Mediterranean prices meanwhile, are proving stickier, with rates about level last week and into this week at $2,480/FEU and $2,827/FEU respectively. This stability may reflect more aggressive blanked sailing campaigns for these lanes during the current tendering season, with some carriers announcing additional GRIs to push prices up to the $3k – $4k/FEU level soon or to start December. 

In air cargo, the end of the US government shutdown has meant the restart of air operations that had been hampered by a drop in available air traffic controllers. The slowdown mostly impacted domestic cargo, and the ramp up is expected to take a few days.

The US’s cancellation of its de minimis exemptions this year was a significant driver of a sharp drop in air cargo volumes to the US – especially in the months immediately following the rule change – and a shift of Chinese e-commerce volumes to other markets, especially Europe.  The European Union voted last week to close its de minimis exemption by 2028, but will explore ways to collect duties on low-value goods as early as next year.

The shift in volumes has been accompanied by a shift in capacity, which has kept the air cargo spot market relatively stable and in line with seasonal demand changes. Freightos Air Index China – US rates increased 5% last week to $6.60/kg, up from less than $5.00/kg in early October and at its highest sustained level this year as peak season demand grows. Last year, rates hit a high of $7.30/kg in mid-December.

China – Europe prices increased 2% to $4.01/kg last week, up from about the $3.50/kg level held pre-Golden Week. Transatlantic rates increased 6% to $2.31/kg last week, up from $1.70/kg in mid-October and to its highest since March. Rates for this lane were at $2.60/kg a year ago. 

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) increased 48% to $2,958/FEU.    
• Asia-US East Coast prices (FBX03 Weekly) decreased 3% to $3,513/FEU.
• Asia-N. Europe prices (FBX11 Weekly) increased 9% to $2,492/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) increased 24% to $2,837/FEU.

Air rates – Freightos Air index

• China – N. America weekly prices increased 4% to $6.30/kg.
• China – N. Europe weekly prices decreased 6% to  $3.92/kg. 
• N. Europe – N. America weekly increased 9% to $2.18/kg.

Analysis

The US Supreme Court heard arguments last week in the appeal of lower court decisions that invalidated President Trump’s use of the International Emergency Economic Powers Act to impose fentanyl-related and reciprocal tariffs this year.  

Questions and comments made by justices during the hearing gave the impression that the court is likely to rule against the administration. While there’s speculation that a decision could come as soon as the end of the year, the court has until the end of its term in June to issue a ruling.

Striking down this use of IEEPA could potentially open a low-tariff window for arriving goods from many countries. But the White House will certainly be motivated to close that window quickly and re-establish duties using other more-recognized legal paths for country-specific tariffs. These options include a trade law empowering the president to apply immediate 15% country-specific tariffs for 150 days which the administration could use as a first step to restoring tariffs through other means.

East-West ocean rates increased significantly on most lanes via November 1st General Rate Increases last week. Transpacific prices to the West Coast climbed 48% and $1,000/FEU to about $3,000/FEU, but daily rates so far this week are trending down slightly and rates to the East Coast remained about even with October levels. 

There are reports indicating prices could fall back to their late October levels soon, which were themselves pushed up from year lows hit in early October via GRIs. Some carriers are announcing additional blanked sailings for the transpacific this month in moves to at least keep rates from backsliding to recent lows.

The current low demand period poses a challenge to carrier GRI ambitions. The latest National Retail Federation US ocean import report estimates October volumes sagged to about even with the previous lows for the year hit in May and June when US tariffs on China were at 145%. The report also projects that demand will ease further in November and December with double digit monthly decreases compared to last year as tariff frontloading has meant declining volumes since mid-August.

US ocean imports are expected to rebound during the lead up to Lunar New Year in January and early February, but these months are also projected to be down significantly year on year due to comparisons with Q1 2025 when frontloading began.

Asia – Europe rates climbed 9% to about $2,500/FEU last week with prices to the Mediterranean up 24% to $2,837/FEU on November GRIs. Some carriers have announced mid-month GRIs aiming to increase rates to the $3k/FEU mark for Asia-Europe as the long-term contract tendering season gets underway for this lane.

But in addition to the low demand challenge, carriers are also contending with continued fleet growth and climbing overcapacity. While Red Sea diversions last year were enough to keep rates well above long term norms, the monthly global rate benchmark has been lower year on year since March even as volumes have grown overall in 2025.  A container traffic return to the Red Sea will, after a transition period, exacerbate the supply surplus. Reports this week of Houthis declaring an end to Red Sea attacks and carriers meeting with Suez Canal officials may mean the return to the Suez is getting closer.

In air cargo, the US government shutdown – which could end soon – has led to a shortage of air traffic controllers and the phase in of a 10% reduction in flights in the US which is disrupting domestic passenger travel and bellyhold air cargo operations along with it.

But as domestic freighters and international flights – which account for the bulk of the US air cargo market – are spared for now, the overall impact on air cargo should be minimal. Once the shutdown ends, airlines are expected to be able to restart their full flight schedules within 12-36 hours. Despite the delays, Freightos Air Index intra-North America rates have stayed stable at about $1.60/kg.

Changes to the US de minimis rules back in May meant a sharp initial drop in China-US e-commerce air cargo volumes, though recent data shows a gradual rebound in volumes since then as e-comm platforms adjust to the new rules – though not back to levels when de minimis was available. 

Asia – Europe e-commerce air cargo volumes have shown nearly uninterrupted growth throughout the year as China’s e-commerce giants shifted focus to US alternatives, especially markets where de minimis exceptions are still in place. But there have been multiple signs of opposition to the flood of low cost goods entering these markets, including in the EU. Just this week France announced increased inspections of all e-commerce imports which is leading to backlogs at CDG.

But as has been the case since May, capacity shifts have meant that despite year on year volume declines transpacific rates remain elevated even if moderately below 2024 levels. China-US rates increased 4% to $6.30/kg last week on some likely peak season demand bump though prices were at about $7.00/kg last year. Likewise, despite volume growth, China-Europe rates which were at $3.92/kg last week, are about on par with prices in 2024.