Trans-Pacific Rates Remain Elevated as the Market Prepares for Peak Season

Source: Freight Waves

The international container shipping market is entering a sensitive phase as trans-Pacific rates remain anchored at a high baseline, even though peak season demand has not yet truly exploded.

With tensions in the Strait of Hormuz showing no signs of cooling down, fuel cost pressures and capacity control measures by carriers are serving as the primary drivers keeping freight rates elevated.

According to Judah Levine, Head of Research at Freightos, trans-Pacific rates are currently hovering about $1,000/FEU higher than before the Iran conflict escalated in late February. Notably, the market is believed to still have room for further increases if peak season shipping demand begins to improve in the coming weeks.

Rates Move Sideways, but Upward Pressure Persists

In his latest research report, Levine noted that rates from Asia to the US moved mostly sideways last week, fluctuating around $2,800/FEU to the US West Coast and approximately $4,300/FEU to the US East Coast.

However, daily spot rates on several routes have already begun to tick upward following mid-month rate hikes implemented by carriers. According to Freightos, it is entirely possible that the trans-Pacific peak season is starting earlier than usual, though this signal remains somewhat ambiguous at present.

Market Volatility Renders Historical Benchmarks Obsolete

Analysts suggest that year-over-year comparisons no longer accurately reflect the true state of the market.

This is due to global supply chains being continuously roiled by front-loading cargo to evade tariffs, unexpected capacity adjustments, and shifts in importers' procurement strategies. Consequently, the traditional seasonal models of the container shipping market have become significantly harder to predict compared to previous years.

“Capacity Discipline” Will Dictate Rate Trajectories

According to projections from the US National Retail Federation (NRF), this year’s shipping peak season is highly likely to commence in July.

Against a backdrop of demand that has yet to stage a robust recovery, the biggest question now is whether carriers have cut enough capacity to sustain current rate levels.

Judah Levine notes that shipping demand could soon bounce back in the near term. However, if cargo volumes fail to improve substantially, the effectiveness of blank sailings and capacity-tightening strategies will play a decisive role in the market’s ability to defend prices.

Current developments indicate that the high rate environment does not reflect a market experiencing a demand boom; rather, it is primarily driven by operational cost pressures and carriers' aggressive capacity management strategies.

In this landscape, shippers and freight forwarders need to prepare their cost scenarios well in advance for the second half of the year, particularly as the market simultaneously faces geopolitical risks, fuel volatility, and the ever-present threat of global trade policy shifts.

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Source: Phaata.com (According to Freight Waves)

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