European container shipping rates fell sharply in the third quarter due to a decrease in demand. This decline was caused by shipping companies avoiding the Red Sea route, according to S&P Global.
Premature Peak
The premature commencement of the peak season in Asia-Europe movements meant market participants stopped looking to secure cargoes earlier than usual. Longer transit times due to Red Sea diversions forced shippers to front-load their shipments in anticipation of logistical challenges, such as a lack of container equipment supply, irregular weather patterns, and port congestion.
Platts Container Rate 1 — PCR0100 — from S&P Global Commodity Insights, which covers North Asia to North Europe flows, fell a staggering $5,500, or 65%, on the quarter to reach $3,000 per forty-foot equivalent unit as of Oct. 9, following eleven consecutive weeks of freight rate declines.
“Shipping lines expect the market to go down further, they would rather wait as some of them have not finalized services and transit times on routes, so they don’t want to finalize any business just yet,” a forwarder source said.
Box Rates Fall
Sources said participants were readying themselves for negotiations focusing on long-term rates for the upcoming year. Carriers had adopted a wait-and-see approach, given the new alliance collaborations — such as the Gemini Cooperation between Maersk and Hapag-Lloyd — announced for 2025 were still a work in progress.
Container lines Maersk and Hapag-Lloyd on Sept. 10 announced details of Gemini Cooperation, set to launch in February 2025. The liner companies released “two network options,” showcasing routings via the Cape of Good Hope and the Suez Canal, as ongoing shipping disruptions in the Red Sea continue to challenge the region.
“The Suez Canal could be closed for the whole of 2025 given the geopolitical situation is worsening and there doesn’t seem to be an end in sight,” a logistics source said.
Port congestion remained a significant issue in Europe, with delays of up to 30 days reported at Felixstowe port. This prompted carriers to seek alternative routes to avoid disruptions. Despite these challenges, some carriers remained bullish about the market’s long-term prospects.
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Source: S&P Global
