Container freight rates climbed on major Asia-Europe and trans-Pacific routes last week despite signs of cooling demand, as congestion and canceled sailings supported prices.
Carriers’ accelerating return to the Red Sea is reshaping shipping schedules, analyst and SONAR data contributor Freightos (NASDAQ: CRGO) said in an update, while a potential strike at Los Angeles-Long Beach adds another source of uncertainty for cargo owners.
Nearly two-thirds of capacity deployed between Asia and Europe is now routing through the Red Sea, according to Alphaliner. Its survey of the 10 largest carrier networks found that 24 of 46 direct services were using the passage, representing 63% of deployed capacity. The share was higher on Mediterranean routes, at 70%, than on North Europe services, at 58%.
Israeli carrier Zim announced a return to the Red Sea for its joint Asia-U.S. East Coast service with Mediterranean Shipping Co. The move is notable because Yemen-based Houthi rebels backing Hamas in Gaza declared the Bab el-Mandeb Strait in the southern Red Sea closed to Israel-linked vessels as recently as August.
The return remains uneven. Some services are using the Suez Canal on voyages toward Europe while continuing to sail around Africa on their return journeys, emphasizing carriers’ continued caution about the route.
Typhoon Champi brought fresh disruption to East Asia last week, closing Taiwanese container ports, including Kaohsiung, Keelung and Taipei, on Friday. The storm largely spared East China port operations before weakening as it moved toward Japan.
Major Chinese container hubs are still recovering from earlier summer storms, with many yet to return fully to normal operations. That congestion has helped support freight rates even as demand eases after the peak shipping season, according to the update.
The shift back to the shorter Red Sea route may also be complicating the recovery. Ships arriving ahead of schedules built around longer Africa voyages can bunch together at destination ports, adding pressure to terminals already working through backlogs.
Asia-Europe freight prices have risen since mid-October, supported by congestion and carriers’ efforts to restrict available capacity through blank sailings, or canceled departures. Carriers are seeking further increases in November, although forwarders have reported discounted offers and questioned whether the higher prices will hold.
The Freightos Baltic Index put last week’s Asia-North Europe rate at $3,551 per 40-foot equivalent unit, or FEU, up 3%. Prices to the Mediterranean rose 8% to $4,252 per FEU.
Carriers are pairing their November pricing plans with additional sailing cancellations. Drewry reported eight blank sailings scheduled on Asia-Europe routes for the following week, compared with two in the current week. European forwarders nevertheless said carriers had discounted their published rates during October and expected similar concessions in November.
Trans-Pacific prices also rose, defying expectations of a slowdown after China’s Golden Week holiday. Asia-U.S. West Coast rates increased 3% to $8,368 per FEU, while East Coast rates jumped 9% to $10,565, a high for the year.
Daily East Coast prices have since retreated but remained about $200 per FEU above the previous week’s level, Freightos said. The analyst noted forwarders are seeing signs that demand is cooling and space is becoming easier to secure.
At LA-Long Beach, approximately 250 port watchmen have authorized a strike that could begin Nov. 1 if contract negotiations fail.
Although the workers account for only about 2% of the ports’ International Longshore and Warehouse Union workforce, their role could give a walkout a much wider impact. The Pacific Maritime Association said terminals employing the watchmen handle roughly 85% of Long Beach’s cargo and 33% of Los Angeles’ cargo.
The employers’ association warned that other ILWU members were not expected to cross Local 26 picket lines, potentially stopping vessel, yard and gate operations at affected terminals. Negotiations remain underway, and a strike has not been confirmed.
Any work stoppage would add to existing delays affecting rail-bound containers at the port complex, according to the supplied update.
U.S. trade policy presents another approaching deadline. The White House extended its trade truce with China in late September, preserving the current arrangements on tariffs and other parts of the agreement until early January, according to the supplied update.
However, U.S. port fees on China-linked vessels remain formally scheduled top resume Nov. 10. Although much of the shipping industry expected those charges to be deferred alongside the broader truce, the U.S. Trade Representative had instead opened a request for comments on postponing them until January. That step points toward a possible delay but does not itself suspend the fees.
The update also said USTR expects to complete Section 301 investigations into excess manufacturing capacity in China and 15 other countries by year-end.
Those investigations could provide a basis for restoring tariffs to levels previously imposed under the International Emergency Economic Powers Act. Following the Supreme Court’s invalidation of IEEPA-based tariffs, replacement duties left some countries, including China, facing rates below their negotiated levels, according to the supplied account.
Even if the investigations conclude by December, the required public-comment and hearing process could push implementation of any resulting tariffs back by another couple of months, leaving a further gap between the findings and new duties.
Why it matters: Importers face uncertainty over both shipping costs and delivery times, even as the return to the Red Sea promises shorter voyages. More capacity does not automatically mean cheaper or more reliable shipping when congestion, canceled sailings and labor disputes interfere.
Read more articles by Stuart Chirls here.
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