Spot Rate Slump Threatens to Sink Carrier Profits

By Gavin van Marle (The Loadstar) – Container spot freight rates on the main east-west deepsea trades witnessed more declines this week, as a combination of weak demand and excess supply of slot capacity prevailed.

There was, however, one major divergence that could herald an upswing in spot rates on the Asia-North America trades: double-digit upward spot rate movements on the transpacific, recorded on the Shanghai Containerised Freight Index (SCFI) and the Ningbo Containerised Freight Index (NCFI), both of which collect spot rate quotes for the forthcoming week.

The SCFI’s Shanghai-US west coast base port leg saw spot rates increase 17% week on week, to end at $1,923 per 40ft, while its Shanghai-US east coast base part leg was up 10%, to $2,866 per 40ft.

Meanwhile, the NCFI, which measures its index on points rather than $, recorded a 45% week-on-week rise in spot rates to the US west coast, and a 25% week-on-week increase on US east coast shipments.

However, these increases stood in stark contrast to the spot levels seen on this week’s World Container Index (WCI) from Drewry, which recorded a 3% decline in its Shanghai-Los Angeles leg, which ended the week at $2,332 per 40ft, and a 5% decline on Shanghai-New York, which finished at $3,291 per 40ft.

Similarly, Freightos’s FBX China-US west coast was down 10%, to end at $1,744 per 40ft

Meanwhile, Xeneta’s XSI remained relatively flat for transpacific pricing – its Far East-US west coast was down just 0.6%, to $1,852 per 40ft, and down 0.5% week on week to the east coast, at $2,873 per 40ft.

The simplest explanation for the index divergences is that the forward-looking nature of the SCFI and NCFI has included optimistic expectations that 1 September general rate increases (GRIs) – ranging from $1,000 to $3,000 per 40ft, depending on the carrier – will stick next week.

Another cause suggested to The Loadstar by one source was that the increases could suggest rising demand prior to China’s Golden Week holiday which begins on 1 October.

In any case, spot rates have now hit a level that is dragging carriers into loss-making territory, said Xeneta chief analyst Peter Sand, adding: “Further gradual decline means spot rates are moving closer to pre-Red Sea crisis levels.

“The last time we saw rates this low, prior to escalation in the Red Sea, carriers were posting big losses.

“Carriers may still make big bucks in 2025 overall, but this profit will have been made during the volatility earlier in the year, with Q4 returning to loss-making in isolation,” he explained.

Asia-Europe spot rates also continued their descent. The XSI’s Far East-North Europe leg shed 3.6% week on week, to end at $2,811 per 40ft while the WCI’s Shanghai-Rotterdam leg lost 10%, to finish the week at $2,661 per 40ft.

The WCI’s Shanghai-Genoa route lost 5% on the previous week, to end at $2,841 per 40ft, while the XSI was essentially flat, at $3,122 per 40ft. The SCFI and NCFI offer little prospect of a rebound anytime soon, losing 11% and 14% on Asia-North Europe pricing, respectively.

Mr Sand added that, with shippers experiencing a soft spot pricing environment, their thoughts will now be turning to the looming annual contract negotiations, later in the year.

“It is important shippers do not look back in anger at the higher freight rates they paid, they cannot recoup this money.

“Instead, they should be looking forward to the next tender season as an opportunity to strike a better freight rate as well as enhanced service delivery,” he said.

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