- Freight rates are falling across Asia-Europe and Asia-US routes, with FBX11 down 32.67% in January.
- The Trump administration’s potential tariffs could disrupt trade patterns.
- Futures markets are pricing significant discounts, with long-term contracts for Cal26 offering up to 50% savings from current spot prices.
With the new Trump administration taking charge, global freight markets are already feeling the impact. Spot rates on major routes, including Asia-Europe and Asia-US, are plummeting, driven by tariff concerns, geopolitical shifts, and a loosening of Red Sea tensions. Meanwhile, oil prices continue to influence freight costs, making the coming months a highly volatile period for shippers and cargo owners, reports Baltic Exchange.
Asia-US Freight Rates Face Steep Decline
For most of January, Asia-US freight rates held strong, bolstered by fears of potential port strikes by the International Longshoremen’s Association (ILA). However, as geopolitical tensions around Suez transit eased, spot rates plunged by 15.16% on the US West Coast.
Futures markets had already anticipated this drop, with long-dated contracts (Q3, Q4’25, and Cal26) trading at steep discounts. Beneficial Cargo Owners (BCOs) looking at 2026 contracts are now seeing rates at nearly half of current spot prices, providing a hedging opportunity amid the uncertainty.
Asia-Europe Freight Rates Collapse as Market Adjusts
The Asia-Europe route experienced the sharpest decline, with FBX11 falling 32.67% in January. The Asia-Mediterranean (FBX13) rate also dropped, but only by 9.86%, closing the premium gap between the two.
Concerns over Red Sea security risks had propped up rates for months, but January’s easing of tensions triggered a market correction.
Contracts that were trading at $4,750/FEU earlier in the month have now settled around $3,500/FEU. However, Trump’s potential tariffs on Asian imports to the US could push more cargo onto Asia-Europe routes, complicating future rate predictions.
Unpredictable Tariffs and Market Alliances Shape 2025 Outlook
As Trump’s tariff policies unfold, Asia-US trade could see a slowdown, leading to unexpected shifts in the Asia-Europe market.
The last Trump presidency saw similar trade diversions. They were overshadowed by the pandemic. Additionally, shifting China-US-Europe relations and potential rate wars between shipping alliances could create even more volatility in the freight market.
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Source: Baltic Exchange
