Q1 FREIGHT MARKET RECAP OF WEBCARGO BY FREIGHTOS: OCEAN RATES SLIDE ON CAPACITY AND ALLIANCE DISRUPTIONS, AIR CARGO STRENGTHENS WITH E-COMMERCE DEMAND

The Freightos Baltic Index Global benchmark which had climbed to $4,300/FEU in early January in the lead up to Lunar New Year has continued to ease since then and through the close of Q1.

The global rate eased 24% month on month to close March at $2,094/FEU slipping below its floor for 2024 on a combination of a post-Lunar New Year lull in demand, impacts from the new carrier alliance services still moving into place, and capacity growth. The global rate nonetheless remains 60% higher than 2019 levels due to Red Sea diversions that continue to absorb capacity across the market.

Asia - Mediterranean and Asia - Europe rates fell 15% to 20% month on month in March to $3,250/FEU and $2,565/FEU respectively. Prices to Europe have fallen 50% since the LNY lead up, and despite continued Red Sea diversions and port congestion at many European hubs these rates are 20% lower than their 2024 lows seen post LNY last year.

The likely culprits for this stronger downward pressure compared to last year are the increased competition and less effective capacity management resulting from the new carrier alliance roll outs – especially as they are still working to bring new services into place – as well as continued fleet growth.

Carriers are reducing capacity to Europe and have announced some General Rate Increases for April, though there is some skepticism that these will succeed in pushing rates up as March GRIs did not result in a rate rebound. With Red Sea diversions looking likely to continue, we may see another early start to peak season on these lanes, perhaps by May, as shippers adjust for longer lead times. 

On the transpacific prices have also continued to slide since LNY, as demand has decreased relative to the pre-holiday rush. At about $2,200/FEU to the West Coast, end of March rates are 37% lower than a month prior.  East Coast rates of $3,300/FEU fell 26% month on month and on both lanes prices are down 50% since LNY.

But despite transpacific volumes estimated to be significantly stronger than a year ago due to continued frontloading ahead of expectations of tariff introductions, rates on both lanes are more than 20% below their 2024 lows, again pointing to the impacts of the alliance reshuffle and possibly of continued global fleet growth as well.

The Trump administration has made early April announcements of the most radical shift in U.S. trade policy in over a century, on a wide range of trade barriers, including reciprocal tariffs on its largest trading partners, or even a global tariff, and sectoral tariffs.  A 10% universal tariff on all imports, plus "reciprocal" tariffs—up to 49%—on nearly 60 of countries based on how they treat U.S. goods. A short report summarizing these developments, the possible economic impacts, and the implications for ocean and air freight markets.

A 25% tariff on all goods from any country that purchases oil from Venezuela will also take effect to start the month, with this and the reciprocal tariffs likely to apply to countries many importers have been exploring or relying upon as alternatives to sourcing from China, like Vietnam and India.

Finally, the USTR’s public hearing on its proposed significant port call fees targeting Chinese-made vessels were held in late March, with American BCOs, exporters, port labor and ocean carriers all objecting to the rule and the significant threats it would pose to their respective businesses.

The frontloading of the last few months will likely ease at some point in the coming months either due to tariff introductions or to inventory buildups, making a subdued transpacific peak season possible.

In air cargo Freightos Air Index data shows Q1 global rates eased from late year peak season highs early in the quarter, then leveling off until a moderate late-March rebound.

Prices from China to Europe settled as low as $3.00/kg in early March down from a brief climb to more than $5.00/kg during December’s peak weeks. This lane closed the quarter at $3.79/kg for a 15% month-on-month and annual increase, with prices from South East Asia of $3.73/kg 27% higher than at the end of February and 32% higher than a year ago.

This rate strength – prices on the ex-Asia lanes are about 50% higher than the longer term off-peak norms – is largely attributable to the continuing and growing surge of B2C e-commerce volumes moving by air from Asia to Europe as well as to North America. This trend  for Europe is likely to continue this year, though the European Commission has proposed significant early-2026 changes to the de minimis exemption that is a big facilitator of low-value goods using air cargo.

President Trump canceled but then quickly reinstated de minimis eligibility for Chinese exports to the US in February.  Anticipation that the US will ultimately cancel this exemption for China may already be driving a reduction in air cargo demand on this lane, including reports of canceled charter flights and carrier shifts of capacity to other lanes.

So far, though, spot rates have remained buoyant. Transpacific rates eased for much of Q1 from a brief peak season high of more than $7.00/kg in December to a still well above normal low of $4.61/kg in early March. To close the quarter, China-US prices rebounded to $5.65/kg, about on par with a year ago. 

Transatlantic rates which had increased to more than $3.00/kg in December partly due to freighter capacity moving from this lane to the transpacific to serve peak season e-commerce demand have leveled off at about $2.35/kg since early February. This rate level is 20% higher than a year ago, possibly still due to capacity being devoted to e-commerce lanes or to some e-commerce volumes transiting through Europe from the Far East.

Source: WebCargo by Freightos

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