Spot container freight rates have continued to drop this week due to more vessel capacity and lower demand, according to the latest report from Drewry World Container Index.
The benchmark index, which many shippers and procurement teams monitor closely, saw a 4% decrease this week, now sitting at $4,374 for a 40-foot container. This marks the second week in a row of falling rates.
The largest drop was seen in transpacific trades. Rates from Shanghai to Los Angeles decreased by 6%, reaching $5,878 per FEU, while rates from Shanghai to New York fell by 4% to $7,598 per FEU.
Drewry pointed to the rise in market capacity along with diminishing demand as reasons for the decline. They noted that there are six blank sailings planned on the transpacific route next week, down from nine this week, indicating that carriers are adding more capacity even though cargo volumes are lower.
Despite the recent rate drops, Drewry expects transpacific rates to remain relatively stable next week.
Additionally, uncertainty surrounding U.S. trade policy is influencing the market. Current 10% global U.S. import tariffs will expire on July 24, and new tariffs are expected to begin in early August, adding another layer of complexity for importers and shipping demand.
Asia-Europe trades have also seen some weakness, although the declines were less significant.
Rates from Shanghai to Genoa decreased by 5% to $5,988 per FEU, while rates from Shanghai to Rotterdam slipped by 1% to $4,824 per FEU.
Drewry reported that four blank sailings are scheduled on the Asia-Europe route next week, which is two more than last week, but overall market capacity is still increasing as demand slows down. They expect rates on this route to drop again next week.
Geopolitical tensions also play a role in the container market. Concerns about the Strait of Hormuz and ongoing U.S.-Iran tensions have led several carriers to implement Emergency Fuel Surcharges (EFS) starting in August.
While these security issues have not yet halted the recent decline in spot freight rates, Drewry says that geopolitical events and the uncertainty over U.S. tariff policy could continue to impact container markets in the coming weeks.