Ocean freight rates to fall further

The ceasefire between Israel and Hamas, which began on 19 January 2025, is expected to last 42 days before entering Phase 2, potentially leading to a permanent ceasefire. As a result, global trade dynamics are shifting, with ocean freight rates continuing to decrease.

“Ceasefire in the Middle East does not suddenly mean there is now safe passage through the Red Sea for all container ships – but it is enough to cause a change in market sentiment and this has a real impact on freight rates,” said Peter Sand, Xeneta chief analyst.

“We must factor Lunar New Year celebrations in the Far East, which traditionally sees a slowdown in containerised exports at this time of year, but there is little doubt the evolving situation in the Red Sea is contributing to falling freight rates.”

Rates into North Europe stand at US$3,795 per 40ft container, down 22% since 1 January while Mediterranean rates are at US$5,085, a 13% drop. Early February data suggests further declines of 5-10% on both routes.

On US-bound trades, average spot rates to the East Coast decreased by 7% in January, reaching US$6,417 per feu. West Coast rates saw a more significant decline, down 14% to US$5,021.

In response to this declining market, ocean carriers are implementing capacity management strategies, including increasing blanked sailings.

On routes to the Mediterranean and North Europe, blanked sailings will surge by 318% and 449%, respectively, by 24 February 2025.

“Carriers will not sit on their hands while freight rates collapse,” said Sands. “They will do everything they can to keep rates elevated and have got much smarter at capacity management in recent years.”