Freight rates thus far in the second half of 2025 have been characterized by a constant decline on the heels of tariff whiplash that largely dominated the April-to-June stretch and ultimately upended (and cut short) the typical August-to-October peak shipping season. Multiple indices tracking ocean freight rates have shown declines persisting since a dramatic spike in early June, when shippers were scrambling to access space on container ships after the U.S. and China rolled back their triple-digit tariffs for 90 days. Drewry’s World Container Index (WCI) declined 4.3 percent to $2,250 per 40-foot container as of Aug. 21, marking the 10th straight week the index sloped downward. Since June 12, spot freight rates on the WCI have declined 36.5 percent.
The declines are substantially more pronounced on the trans-Pacific trade lane from their early June peaks. Shanghai-to-Los Angeles rates have plummeted 59.2 percent, while New York-bound containers cratered 52.5 percent.
Drewry expects spot rates across the board to be less volatile in the coming weeks, especially as retailers are expected to scale back procurement amid the increased tariff costs since they kicked in for most countries Aug. 7.
“Drewry forecasts that spot rates will decline in the remaining four months of the year. But, as we have learned since Covid, many potential disruptions or market changes could bring spot rates back up again,” Philip Damas, founder and head of Drewry Supply Chain Advisors, told Sourcing Journal. “The current known potential cost inflation triggers are the new U.S. fees on China-built ships, renewed port congestion and traffic volume swings, as we get near the end of the tariff ‘pause’ on U.S. imports from China.”
With a new China tariff deadline of Nov. 10, shippers could still look to pull in more last-minute goods in October. Rates could still shift depending on the trade route and origin country of the product as the costs of U.S.-levied tariffs further kick in.
“For some countries that have reached trade agreements with the U.S., tariffs meant to be reduced or removed on many types of goods are still being collected as implementation conditions still need to be fulfilled or details of the deals are still being hammered out,” said Judah Levine, head of research at Freightos. “These implementation lags mean it will take longer to see if the tariff changes impact freight volumes and rates.”
No traditional peak season in 2025
Another freight rate benchmarking platform, Xeneta, calculated a decline of 2.3 percent to $1,910 per 40-foot container from Asia to the U.S. West Coast on Aug. 20, along with a 1.9 percent dip on Asia-to-East Coast routes to $3,009 per container. Since their June peaks, West Coast-bound and East Coast-bound containers have declined 65.5 percent and 57.3 percent, respectively.
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“With a continuing trend for increasing capacity on front-haul trades and subdued ocean container shipping demand, spot rates will fall further in the coming weeks,” said Peter Sand, chief analyst at Xeneta. “Shippers should not fear peak season surcharges because, quite simply, there is no traditional peak season in 2025.”
Sand pointed out that average spot rates are now at their lowest level since the end of 2023, before the Red Sea crisis kicked in and took more shipping capacity out of rotation due to lengthy transits around Africa. But like Drewry, Xeneta doesn’t expect the rates to reach a floor just yet.
“The rate of decline may have slowed from the dramatic drops in July, but this gradual erosion will continue because there is still room for spot rates to fall further,” Sand said.
Carriers resist capacity cuts—to their own peril?
An Aug. 25 market update from container shipping consultancy Linerlytica said prospects for a September rate rebound are “vanishing quickly as carriers continue to resist capacity cuts to match the drop in demand.”
Depending on the trade lane, Linerlytica said that cargo booking volumes have fallen by between 5 percent to 20 percent from the two weeks prior with the trans-Pacific, Asia-Europe and Latin America routes all under heavy pressure.
Despite the sharp decline, Gemini carriers Maersk and Hapag-Lloyd have committed to a no-blank sailing policy on their core services, largely ignoring the rate slide as they continue to prioritize volumes over freight rates.
“October could prove to be the turning point as carriers will need to make drastic capacity cuts by then to prevent a complete collapse in freight rates,” Linerlytica said, noting that the total container ship orderbook has reached a record high 10.4 million TEUs—thus feeding to wider overcapacity concerns that could further sink freight rates.
The orderbook represents 31.7 percent of the total container shipping fleet, the highest such levels since 2010. There is still more than 1 million TEUs of pending ship orders that are due to be added before the end of this year.
Spot vs. contract dilemma
As ocean freight rates continue their ongoing descent, shippers ultimately will have to weigh whether they will pay the spot market or enter a contract.
“Shippers looking to sign new long-term contracts have much to consider because they must balance where rates are right now, where they are likely to be in 2026 and how much of an impact the ongoing conflict in the Red Sea conflict should have on the rates they are paying on each trade,” said Sand.
According to Damas, based on the ocean bids which Drewry runs for shippers, importers and exporters can secure more attractive, lower contract rates in the current market. But there’s no guarantee they’ll get a better rate by waiting.
“Spot rates on some lanes are even lower than contract rates, but they may not last and imply a high risk of cost volatility,” Damas said. “It is usually better for a company with steady shipments and a need for predictable supply chain costs to negotiate a contract (with customized terms and conditions) than to rely on the spot market and standard terms and conditions. Some importers are now even buying their products on delivered duty paid terms, requiring the origin factories to arrange and pay for transportation.”
This article was part of Sourcing Journal’s Logistics Report. To download the full report, click here.
