A container ship is worked by cranes at the Port of Los Angeles. (Photo: FreightWaves/Jim Allen)
Benchmark container rates on the trans-Pacific trade from Asia to the U.S. West Coast fell to their lowest levels since the start of the Red Sea crisis, when Yemen-based Houthi rebels began attacking shipping in late 2023.
While the Houthis have resumed attacks on merchant vessels, leading most major container lines to write off a return to the Suez Canal route in 2026, Asia-West Coast ocean freight rates have also been battered by tariff pressures and too much tonnage, said analyst Judah Levine of Freightos (NASDAQ: CRGO) in a research note.
Levine noted that East Coast prices are also “within striking distance” of their pre-Red Sea levels.
Furthermore, rates falling back to levels last seen before the Red Sea crisis began – despite current ongoing attacks – suggest that carriers are still wrangling with overcapacity. “Spot market developments for Asia-Europe trade may also support the possibility that overcapacity is already impacting rates,” Levine wrote.
June’s early peak season surge of import volumes is but a fond memory as shippers brought goods earlier than normal to beat tariff deadlines.
Asia-U.S. West Coast rates dropped 8% to $1,940 per forty foot equivalent unit (FEU) in the most recent Freightos Baltic Index, and 3% for Asia-U.S. East Coast prices, to $3,472 per FEU.
“When the U.S. lowered baseline tariffs on Chinese exports from 145% to 30% in May for a period of 90 days, trans-Pacific ocean freight demand surged and container rates soared to more than $6,000 per FEU to the West Coast as shippers rushed to move goods that would make it to the U.S. before the August expiration date,” wrote Levine.
SONAR index showing decline of inbound loaded containers since June peak.A Freightos poll of supply chain professionals found that about half expect the White House’s recent announcement that it will extend that 30% baseline tariff for an additional 90 days to lead to another peak season bump.
“But the other half thinks, even with the extension, this year’s peak season is behind us – and so far container rates seem to support those expectations,” Levine added.
Industry sources have told FreightWaves that the tariff pause extensions weren’t driven just by economic concerns or a lack of a new trade agreement with China. They said that the extensions came after U.S. Customs’ systems were overwhelmed by the drastic tariff reset and by the new data requirements following the elimination of de minimis for low-value goods.
Elsewhere, Freightos said Asia-Europe peak season demand is robust as China finds new markets for goods after the disruption in U.S. trade.
“But even with strong volumes, persistent congestion at several major European container hubs, and Red Sea diversions still absorbing capacity directly on this lane, container rates are 60% lower than a year ago, when the Red Sea crisis was cited as the major driver for highly elevated rates of about $7,000 per FEU to Europe and $8,000 per FEU to the Mediterranean,” Levine wrote.
Asia-North Europe rates were flat at about $3,300 per FEU, a peak level that has held since early July. Asia-Mediterranean prices fell to about $3,100 per FEU from a peak season high of $4,800 per FEU in mid-June. Levine noted that carriers will reduce capacity on these lanes in September to shore up rates.
