Freight Foresight: Ceasefire and Seasonal Slowdown Drive Ocean Rates Down
Ocean container shipping rates are expected to decline further in February, driven by a Middle East ceasefire and the typical Lunar New Year lull, even as carriers try to control capacity.
Read also: Container Spot Rates Plunge as Suez Reopening and Lunar New Year Drive Market Volatility
Data from Xeneta shows that current spot rates have dropped significantly since January 1—down 22% to $3,795 per FEU on routes from the Far East to North Europe, and 13% to $5,085 per FEU on Mediterranean lanes. Early signals suggest these rates could fall an additional 5-10% at the start of February.
In the United States, the trend is similar. January saw East Coast rates dip 7% to $6,417 per FEU, while West Coast rates plunged 14% to $5,021 per FEU. Expectations point to further decreases on the West Coast, though East Coast rates might stabilize.
Peter Sand, Xeneta’s Chief Analyst, explains, “The ceasefire in the Middle East hasn’t instantly opened safe passage through the Red Sea for all container ships, but it has shifted market sentiment enough to impact freight rates noticeably.”
In response to these falling rates, carriers are tightening their capacity management. Projections indicate that blanked sailings from the Far East to the Mediterranean will surge to 38,900 TEU by late February—a 318% increase—while similar routes to North Europe are expected to hit 75,700 TEU, marking a 449% rise.
The current ceasefire, which began on January 19 and is set to last 42 days before potentially moving into Phase 2, could pave the way for a long-term resolution. However, Sand cautions that the developments in February will be key to understanding the trajectory for 2025.
Despite these recent reductions, spot rates remain considerably above pre-Red Sea crisis levels. Adding to the market’s challenges is the influx of new vessels, which, if combined with a resurgence in Red Sea routing, could risk a broader market collapse. Additionally, looming geopolitical pressures—including potential Trump tariffs—could push rates upward once again.
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