This week, a trade agreement between the United States and China was announced, but it's unlikely to stop the drop in ocean container freight rates, which are expected to continue their decline into 2026. Xeneta, a key provider of ocean and air freight rate data, provided this analysis.
The agreement was made in Busan, South Korea, and includes a 10% cut in tariffs related to fentanyl as well as a pause on port fees. However, spot rates for shipping from China to the US West Coast have already decreased by 59% compared to last year, now at USD 2,147 for a 40-foot container as of October 31. Rates for the US East Coast have dropped 48% year-on-year, standing at USD 3,044 per FEU.
Emily Stausbøll, a Senior Shipping Analyst at Xeneta, acknowledged the truce as a positive step but cautioned that it won't likely revive the faltering demand for ocean container shipping on Transpacific routes. She stated, “The US-China truce is a positive development, but it will not suddenly breathe life into weakening ocean container shipping demand on Transpacific trades.”
The decrease in rates aligns with falling shipping volumes, with demand for container shipping from China to the US down 13% from last August. Stausbøll pointed out that even with the truce, tariffs remain high, and US businesses will spend the first half of 2026 depleting inventories built up earlier in the year.
Xeneta projects that global average spot rates could drop by as much as 25% for 2026, with long-term rates potentially falling by up to 10%. This forecast indicates that long-term rates would be about 20% lower than levels recorded in December 2023, before the escalation of the Red Sea crisis.
“In 2026, there will be a significant oversupply of container shipping compared to weak demand,” Stausbøll noted. “Carriers will struggle to fill ships on key routes from China to the US because the lower tariffs announced this week won’t change the current situation.”
The trade agreement includes several important measures. Tariffs on fentanyl-related imports from China will be cut from 20% to 10%, lowering the overall tariff rate on Chinese goods to about 47% from the previous 57%. China has agreed to suspend its new export controls on rare earth minerals and magnets for one year. The US will also pause its enhanced restrictions on technology exports, and China has committed to buying 12 million metric tons of US soybeans during this marketing year.
Additionally, the Trump administration decided to halt new port fees for Chinese-built, owned, and flagged ships for a year. These fees had added significant costs to voyages since their implementation on October 14 and were intended to boost US shipbuilding. Stausbøll remarked that the pause has occurred “without any progress being made on the issue that was nominally cited as the reason they were needed.”
The temporary nature of this agreement creates uncertainty for planning in the industry. Stausbøll mentioned, “It takes longer than 12 months to establish manufacturing plants in another country if a shipper wants to change supply chains away from China. No one can predict with certainty what will happen when the truce ends—or if it will even last a full year.”
This deal avoids a previously threatened 100% tariff on Chinese goods and extends the trade truce between the world's two largest economies for approximately one year.