This week, the Drewry World Container Index dropped by 5%, bringing the cost down to $1,859 per 40-foot container. This marks the first weekly decline after four weeks of increases, as demand slows following the holiday season and uncertainty continues in Red Sea shipping.

Transpacific shipping routes saw the biggest drops, with spot rates falling 15% from Shanghai to New York, now costing $3,254 per 40-foot container. Rates to Los Angeles also decreased by 12%, now at $2,328. This decrease follows a brief uptick in prices driven by rate hikes that were not sustainable once retailers finished importing holiday goods.

According to the index assessment, "Drewry anticipates rates will either drop slightly or remain stable next week," as shipping companies find it hard to keep their prices up with decreasing demand.

The Asia-Europe trade routes showed some strength, with spot rates from Shanghai to Genoa increasing by 4% to $2,193 per 40-foot container, and rates to Rotterdam rising 3% to $2,028. Shipping companies are trying to raise prices by implementing higher FAK rates between $3,000 and $3,650 per 40-foot container starting November 15, as they prepare for annual contract talks.

Nevertheless, the basic conditions of the market are still delicate. Drewry's Container Forecaster predicts that the supply-demand balance will weaken in the coming months, especially if regular Suez Canal transits resume after a recent ceasefire announcement by the Houthi group.

Peter Sand, Chief Analyst at Xeneta, cautioned that a significant return to the Red Sea could have serious effects on global container shipping. He stated, "Details are unclear, and you can't rely on the assurance of safety from Houthi militia. Carriers need much more certainty than that, and so do insurance companies."

Data from Xeneta shows that rerouting around the Cape of Good Hope continues to absorb around 2 million TEU of worldwide container shipping capacity, with estimates indicating that the crisis has cut global shipping capacity by 8%. A sudden return to Red Sea routes would add lots of capacity when demand is already declining.

Sand mentioned that "Average spot rates from the Far East to Northern Europe, the Mediterranean, and the US East Coast—three routes usually going through the Red Sea—have all fallen by over 50% since the beginning of the year. A large-scale return of container ships to the Red Sea would swamp the market with capacity and push freight rates even lower worldwide, affecting more than just the routes directly influenced by the diversions."

Maritime security experts remain cautious regarding the Houthi ceasefire. While the risk of attacks in the Red Sea, Gulf of Aden, and surrounding areas is considered much lower, the group still has the ability to target commercial ships. The conditional ceasefire creates further uncertainty, as attacks could resume if Israel resumes military actions in Gaza.

For shippers and carriers, the next few months will be challenging. Sand highlighted the importance of having contingency plans in place. "Carriers are already facing losses, and freight rates are expected to drop as much as 25% globally by 2026, even if the situation in the Red Sea doesn't change," he stated. "Shippers should prepare for potential disruptions in global ocean supply chains if services running through the Suez Canal are reinstated."

As the industry monitors changes in the Red Sea, high marine insurance costs continue to pose a significant barrier to a wide return to that route, along with ongoing concerns about the safety of crews and cargo.