Global Shipping Eyes Red Sea Return as Trans-Pacific Rates Lose Steam

Overcapacity in trans-Pacific shipping routes has derailed carriers’ plans to raise freight rates in
November, with prices quickly falling back after a short-lived increase.

Spot rates to the U.S. West Coast, which briefly climbed to about $3,000 per forty-foot
equivalent unit (FEU), plunged 32% last week to $1,900, according to Freightos. They slipped
another $100 this week, though they remain above October’s yearly low of $1,400.

Rates to the East Coast also dropped, down 8% last week to $3,400 per FEU and settling at
$3,000 this week — roughly where they stood in early October.

Global attention has focused on the Red Sea, where a fragile ceasefire in the Gaza conflict has
sparked talk of major carriers returning to the Suez Canal route in an attempt to reshape the
trade flows. CMA CGM has announced plans to expand its services, while Maersk said it has no
immediate plans to resume transits.

“While most carriers are not offering a timeline, ZIM’s chief executive recently stated that a
return in the near future is increasingly likely,” Freightos research chief Judah Levine, in a note
to clients.

Levine said about 30% of global container traffic normally passes through the Suez Canal, but
most liners began rerouting around Africa in late 2023 after attacks on merchant ships by
Yemen’s Houthi militia. Those longer routes added seven to ten days and thousands of miles to
Asia-Europe and some Asia-North America sailings.

If carriers resume Suez Canal transits, ships are expected to arrive earlier than planned, likely
causing congestion at already busy European ports. Levine said this could temporarily tighten
capacity and push up rates, though carriers plan to reintroduce services gradually with smaller
vessels to limit disruptions. Industry estimates suggest that about 2 million TEUs of capacity
could be restored through this shift.

Levine added that the Red Sea diversions in 2024 had previously driven East-West rates to as
high as $8,000 to $10,000 per FEU, setting a “floor” of $3,000 to $5,000 even during weak
demand. Rates this year have been much lower, with some lanes returning to 2023 levels in
early October.

Rate hikes in Asia-Europe lanes have been more successful, rising 40% since early October to
$2,500 per FEU for Europe and $3,000 for the Mediterranean as carriers cut sailings to manage
supply.

Carriers are planning another round of general rate increases in December, aiming for $3,000 to
$4,000 per FEU, Levine said, though those gains may be limited. An announced labor strike in
Belgium could also tighten supply and influence rates in the weeks ahead.