Briefing Overview

  • According to Freightos' release on June 30Weekly Market Update, transpacific freight rates are rising due to peak season demand driven by shippers' early stockpiling.
  • Shippers are rushing to front-load cargo, causing an early peak season, aiming to avoid expected bunker adjustment factor (BAF) increases in July, manufacturer price hikes, and tariff deadlines facing US shippers. Freightos notes that the early peak season may also mean peak demand could taper off earlier at some point in July.
  • According to Freightos data, spot rates from Asia to the US West Coast have risen to $6,200 per FEU (40-foot equivalent unit), up 120% since mid-May; rates from Asia to the US East Coast are reported at $8,000 per FEU, an 85% increase over the past six weeks.
Key Data
$6,200
Asia to US West Coast spot rate (per FEU), as of July 4
$8,000
Asia to US East Coast spot rate (per FEU), as of July 4

Data source: Freightos

In-Depth Analysis

Shipper behavior shows caution, with front-loading still ongoing. Although fuel prices had pushed rates up, Freightos states that the surge in peak season demand is now the primary driver.

Late last month, the US and Iran announced aceasefire agreementaimed at reopening the Strait of Hormuz. However, according to a June 19 Xeneta update, even if the agreement takes effect, recovery of the maritime supply chain network is not expected until mid-September. Last week, the US and Iran held talks with Qatari and Pakistani mediators respectively, and both sides agreed to continuediscussions on seeking a permanent end to the war, the Associated Press reported.

Front-loading is driving demand on transpacific routes. For example, capacity supply from Asia to the US West Coast has reached historic highs, said Peter Sand, chief analyst at Xeneta, in a July 3Shipping Market Update.

"Record capacity deployment combined with further increases in transpacific rates indicates strong demand, and carriers are striving to meet it," Sand said in the weekly update.

Since June 29, the four-week rolling average container volume on transpacific routes to the US West Coast is approximately 350,000 TEU (twenty-foot equivalent units), Sand said. This figure matches the record of 349,000 TEU set during last year's90-day US tariff suspension period.

In response to shippers' front-loading, carriers such as MSC are adjusting services. Sand said the shipping line resumed its Pearl service on June 13. The MSC LYSE V was the first vessel on this service to call at the Port of Long Beach on June 30, while Yang Ming and ONE are also adding extra-loader vessels.

"Carriers plan to introduce more rate increases in early July, so the success of these hikes will reflect where the market stands in this year's peak season," Freightos said.

Nevertheless, the market is not yet ready to turn, Sand said, with spot rates still climbing until mid-July, at least for other major trunk routes such as Europe and the US.

"More capacity is welcome and will help shippers move cargo more reliably, but it is not enough to reverse the upward trend," Sand said.