Why Are Freight Rates Falling? US West Coast Rates Drop Below $2,000

The Shanghai Containerized Freight Index (SCFI) has fallen for the eighth consecutive week, dropping 5.21% week-on-week to 1,436.3 points on March 7. Freight rates on major routes, including Europe and the U.S., are under pressure due to U.S. tariff policies and proposed port fees on Chinese vessels.

Latest SCFI Rates

• Shanghai to Europe: 1,582/TEU,down1,582/TEU,down111 (6.56% weekly drop).

• Shanghai to Mediterranean: 2,517/TEU,down2,517/TEU,down77 (2.97% weekly drop).

• Shanghai to U.S. West Coast: 2,291/FEU,down2,291/FEU,down191 (7.70% weekly drop).

• Shanghai to U.S. East Coast: 3,329/FEU,down3,329/FEU,down116 (3.31% weekly drop).

• Persian Gulf: 975/TEU,down975/TEU,down40 (3.94% weekly drop).

• South America (Santos): 2,422/TEU,down2,422/TEU,down348 (12.6% weekly drop).

• Australia/New Zealand: 629/TEU,down629/TEU,down116 (15.6% weekly drop).

• Southeast Asia (Singapore): 439/TEU,down439/TEU,down2 (0.45% weekly drop).

Rates for intra-Asia routes, including Japan Kansai, Japan Kanto, and Korea, remained unchanged.

Capacity Cuts and Route Cancellations

According to Linerlytica, carriers like MSC, the Ocean Alliance, and the Premier Alliance are withdrawing capacity from trans-Pacific and Asia-Europe routes to curb falling rates. For example:

• MSC has canceled its Mustang trans-Pacific route, initially delayed due to port congestion in Singapore.

• The Ocean Alliance postponed the launch of its NEU3 Asia-Europe route, while the Premier Alliance may suspend two trans-Pacific routes set to begin in May.

  
  

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However, Linerlytica notes that these capacity cuts are unlikely to stop the downward pressure on rates. “Rate hike plans have been pushed to the second half of March, but they are unlikely to materialize in the current uncertain market,” the report states.

Rates Continue to Fall
Despite a 7.3% increase in SCFI rates for North Europe last weekend, actual rates remain under pressure due to weak demand. Europe route rates fell by 400/FEU∗∗,whileU.S.WestCoastrateshavedroppedbelow∗∗400/FEU∗∗,whileU.S.WestCoastrateshavedroppedbelow∗∗2,000/FEU, now hovering between 1,800–1,800–1,950/FEU—close to many carriers’ cost levels. Further declines are expected this month.

Potential Recovery in Q2
Industry experts believe that while U.S. tariffs and proposed fees on Chinese shipbuilding may slow economic and consumer activity in the short term, they could eventually disrupt supply chains and boost shipping demand.

Freight forwarders anticipate a seasonal recovery in Q2. Maersk has announced a rate hike for April, raising Europe route rates to 2,600/TEU∗∗and∗∗2,600/TEU∗∗and∗∗4,000/FEU. However, U.S. West Coast rates remain below $2,000/FEU, making it difficult to secure long-term contracts for the new year.