- Red Sea Tensions Add Pressure to Container Freight Rates.
- Transpacific Routes Steady Despite Post-Election Market Shifts.
- Asia-Europe Freight Rates Surge with Post-Election Rally.
November first tracked the developments of October, then was disrupted by the uncertainty that emerged in the aftermath of the US presidential election. A Republican victory infused new uncertainty into the markets, pushing pre-election expectations of stability under a Democratic administration out the window. Better PMI figures from China and incredibly relative stability of instability in the Red Sea further added to market dynamics that kept rates elevated after sell-offs between May and October, reports Baltic Exchange.
Trump Trade and Tariff Implications
The outcome of the election triggered an effect that came to be known as the Trump Trade, in which futures markets surged on Asia-Europe and Asia-US fronthaul routes. This was due to anticipation of new tariffs and front-loading of cargo to get ahead of possible tariff imposition dates. Yet, by month’s end, end-of-month sell-offs capped the strong rallies triggered by the election.
Backhaul trades from the US West Coast to Asia are likely to face further effects as tariffed export prices weigh on forward demand for US-China containerized trade, adding further uncertainty.
Red Sea Tensions Escalate Amid Regional Conflicts
The conflict between Hezbollah and Israel has further exacerbated the continuing instability in the Red Sea, adding to the market’s already priced-in expectations of closures in the Red Sea. A subsequent ceasefire did not have a significant impact on the rates, and the market remains braced for continuing volatility in this region.
Asia-US Trade and Container FFAs
The US election had a significant influence on the Asia-US container trade. Pre-election expectations of stability were overturned by the Republican victory. Despite this, front-month futures largely remained flat, with FBX01 (Asia-US West Coast) finishing November at $4,450/FEU, similar to levels at the start of the year but still elevated above the 2023 rate average.
The rally in post-election pricing occurred from mid-October to mid-November and retraced about half of the value by the end of the month. Q1 2025 futures are currently priced halfway up the mid-year rally, which indicates front-loading activity and continued post-election momentum.
Post-Election Tariff Reactions
Asia-Europe routes responded more sharply to election and tariff news than Asia-US trade. FBX11 (Asia-North Europe) futures jumped 40.3% in a 14-day run-up after the election, peaking on November 21 before dropping to $4,850/FEU by month’s end.
While sharp movements in FBX indices were apparent, Q1 2025 prices were strong, maintaining the rally post-election while remaining stable at just over half of the value experienced in the peak period in early years earlier.
Effects on Contract Negotiations and Speculative Trading
There is good buyer interest in the rally, especially as the contract negotiation periods for Q4 2024 and Q1 2025 began to crystallize. Budgeting for 2025 is driving forward activity, with offers going down the curve through 2026, reflecting healthy container freight rates.
Futures on the INE remain well up against settlement indices owing to speculative Chinese domestic retail trading that is deviating. Conversely, FBX11 futures remain pretty tight to underlying physical rates that were momentarily shocked when their tariffs were stepped in by half at the end of November.
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Source: Baltic Exchange
