Q3 FREIGHT MARKET RECAP OF WEBCARGO BY FREIGHTOS: PRICE UPS AND DOWNS & DEMAND ACROSS THE MAIN LANES
- barboraarendasova
- 1 day ago
- 4 min read
The Global Freightos Baltic Index benchmark fell nearly continuously and by about 50% through Q3 as tariff frontloading pulled peak season early on the transpacific and Red Sea diversions meant an early start again this year for peak demand on the Asia - Europe lanes. Despite ongoing diversions away from the Red Sea, rates have continued to be lower than last year as the market contends with capacity growth from new vessel deliveries.
The US reduction of tariffs on China from 145% to 30% in mid-May – with an August expiration date – triggered an early and brief transpacific peak season and pushed West Coast rates from $2,500/FEU in early May to a 2025-high of $6,000/FEU by mid-June. Once this surge was over, demand eased and rates fell below the $2,000/FEU mark in August. September GRIs pushed container rates up by a few hundred dollars for a short span before prices bottomed out at a loss-making $1,400/FEU in early October.
Carriers increased blanked sailings and pushed prices back up to $2,000/FEU in mid-October, with early November GRIs briefly propelling rates up to about $3,000/FEU. But as carriers contend both with typical seasonal low levels of demand amplified by trade war-driven frontloading earlier in the year, prices have now dropped below the $2,000/FEU mark once again.
A series of Trump trade agreements announced in October and a last minute deescalation with China to start November could mean a more stable tariff landscape in 2026, and a return to more typical seasonal demand trends as opposed to the stop and start and frontloading caused by trade war volatility this year. The Supreme Court’s review of the legality of most of this year’s tariffs is a significant wildcard. But the White House is already taking steps to impose tariffs by other means should the court strike down many of the current duties, which could mitigate any potential impact on freight flows.
Absent direct trade war impacts, Q3 for Asia - Europe and Mediterranean lanes was characterized by stronger demand compared to last year but lower freight rates. Import volumes to Europe were about 8% stronger than in Q3 last year. Asia - Europe rates hit a high for the year in July of $3,500/FEU after climbing nearly 70% compared to May levels on peak season demand. As volumes eased so did rates and by the end of the quarter prices hit about $2,000/FEU and reached a year low of $1,700/FEU in early October.
Asia - Mediterranean rates peaked earlier in June at $4,800/FEU, but then dropped to about on par with Asia - Europe prices by mid-July, with the lanes moving about in tandem through the end of the quarter.
But even with stronger year on year demand, the Asia - Europe peak season high was 60% lower than July rates a year prior as, even with persistent congestion problems, capacity growth has outpaced demand gains.
Carriers have succeeded, through disciplined capacity management, to introduce GRIs starting in mid-October that have pushed and – so far – kept prices up at about $2,500/FEU to Europe and about $3,000/FEU to the Mediterranean through late November as these lanes are in the thick of their long-term contract tendering season.
The – increasingly likely – return of container traffic to the Red Sea some time soon would cause significant vessel bunching and delays at European hubs, which would put upward pressure on rates, especially as the transition period would stretch into the lead up to Lunar New Year. Once operations normalize though, the capacity that has been absorbed by Red Sea diversions will re-enter the market and put additional downward pressure on rates as overcapacity intensifies.
In air cargo, the US’s cancellation of its de minimis exemptions this summer was a significant driver of a sharp drop in air cargo volumes to the US – especially in the months immediately following the rule change – and a shift of Chinese e-commerce volumes to other markets, especially Europe. The European Union recently voted to close its de minimis exemption by 2028, but will explore ways to collect duties on low-value goods as early as next year.
The shift in volumes however has been accompanied by a rapid reshuffle of capacity, which kept the air cargo spot market relatively stable and in line with seasonal demand changes in Q3. Freightos Air Index China - US rates, after some seasonal dip in July, were within the $5.30 - $5.50/kg range for much of the quarter.
Since early October however, prices have climbed on some volume increase from peak season demand and by November were up to more than $6.50/kg, its highest sustained level so far this year. Last year, rates hit a high of $7.30/kg in mid-December.
China - Europe prices were likewise stable within the $3.50 - $3.70/kg range despite volume growth. In late September, pre-Golden Week demand pushed rates up to $4.45/kg. Prices cooled since then but have remained above Q3 levels at about $4.00/kg as peak season gets into gear.
Transatlantic rates were stable at about $1.70/kg through Q3, but have increased to more than $2.30/kg since early October, its highest level since March. Rates for this lane were at $2.60/kg a year ago as both peak season demand and some shift of capacity to transpacific lanes contributed to prices that climbed above $3.00/kg by mid-December.
Source: WebCargo by Freightos
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