Container freight rates continued to slide this week as rising vessel capacity and weaker cargo demand put fresh pressure on key east-west shipping routes, according to the latest figures from Drewry’s World Container Index (WCI).

Read also: Container Shipping Recovery Speeds: From Pandemic to Red Sea Crisis

The benchmark index fell 4% to $4,374 per 40-foot container, marking its second consecutive weekly decline as carriers continue adding capacity despite softer market conditions.

The sharpest drop was seen on the Transpacific trade lane, where spot rates from Shanghai to Los Angeles fell 6% to $5,878 per FEU, while rates from Shanghai to New York declined 4% to $7,598 per FEU.

Drewry attributed the decline to an increase in available shipping capacity combined with slowing cargo demand. The consultancy noted that carriers have reduced the number of blank sailings on the Transpacific route, with six cancellations scheduled for next week, compared with nine this week, indicating more vessels are returning to service.

Despite the recent downward trend, Drewry expects freight rates on the Transpacific trade to remain relatively stable over the coming week.

The market is also closely watching developments in U.S. trade policy. The current 10% universal U.S. import tariff is set to expire on July 24, with revised tariff measures expected to be introduced in early August. The uncertainty is prompting importers to closely monitor shipping schedules and inventory strategies.

Asia-Europe routes also experienced declines, although the decreases were less pronounced.

Rates from Shanghai to Genoa dropped 5% to $5,988 per FEU, while Shanghai to Rotterdam slipped 1% to $4,824 per FEU.

According to Drewry, carriers have scheduled four blank sailings on the Asia-Europe route next week—double the number recorded the previous week. However, overall vessel capacity continues to grow faster than cargo demand, placing additional pressure on freight prices.

The consultancy expects rates on the Asia-Europe trade lane to soften further in the near term.

Meanwhile, geopolitical risks remain firmly on the industry’s radar. Drewry said ongoing tensions surrounding the Strait of Hormuz and the broader U.S.-Iran conflict have prompted several ocean carriers to introduce Emergency Fuel Surcharges (EFS) beginning in August to offset rising operating costs.

Although those geopolitical concerns have not yet reversed the recent decline in spot freight rates, Drewry noted that developments in the Middle East, coupled with uncertainty over upcoming U.S. tariff changes, could significantly influence container shipping markets in the weeks ahead.