- SCFI Shanghai-US west coast index has dropped to just $1,460 per feu, its lowest point since July 7, 2023.
- Spot-rate assessments for east-west lanes by multiple index providers have fallen back to price levels that pre-date the Red Sea crisis.
- Supply dynamics for carriers are worse now than they were prior to the Houthi attacks, underscoring the need for capacity management.
Container shipping spot rates have experienced dramatic swings in recent years, with surges followed by steep declines. The latest trend shows that rates are now falling back toward pre-crisis levels, a development that carries important implications for the industry as it heads into 2026, reports Lloyd’s List.
Drop in container rates
Recent freight indices reveal that container rates have dropped sharply across major trade lanes. Benchmarks for east–west shipping routes, particularly those connecting Asia and North America, are now at their lowest levels since mid-2023. This reversal brings pricing back in line with conditions before the geopolitical shocks and demand surges that disrupted global trade in late 2023 and 2024.
Several forces are driving this market correction. Overcapacity remains the most pressing issue, as carriers continue to expand fleets despite clear warning signs of weakening demand. The industry’s substantial orderbook of new vessels only compounds the problem. At the same time, volume growth has slowed, with some of the recent upticks attributed to tariff front-loading rather than sustainable demand. Meanwhile, scrapping and idling of vessels remain limited, leaving too much tonnage active on key trade lanes.
The relationship between spot and contract rates adds another layer of complexity. While most cargo still moves under annual contracts, spot market movements set the tone for negotiations. Falling spot rates exert downward pressure on future contracts, potentially eroding profitability for carriers in the coming year.
Carriers do, however, have some breathing room thanks to the liquidity cushions built during the pandemic boom. These reserves allow operators to weather periods of financial stress for longer than in past downturns. Still, liquidity is not limitless. If weak spot markets persist, even well-capitalized players will eventually feel the strain.
Need to adopt more disciplined measures
Looking to 2026, the industry faces several possible scenarios. If carriers delay capacity cuts and instead fight for market share, rates could fall further, sparking a destructive price war. Conversely, if operators adopt more disciplined measures — such as scrapping older ships, letting charters lapse, or laying up idle vessels — the market could stabilize and recover. There is also the possibility that an external shock, whether geopolitical or supply-chain related, could jolt rates upward again, at least temporarily.
The months ahead will determine which path emerges. Contract renegotiations for 2026 will be heavily influenced by spot rate movements in the near term. Margins are already being squeezed, particularly in critical east–west routes, and weaker players may struggle to stay afloat. For the industry, the challenge will be balancing capacity discipline with financial resilience as it navigates another year of uncertainty.
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Source: Lloyd’s List
