Container Freight Rates Slide for Fifth Consecutive Week as Pre-CNY Surge Fails to Materialize
Global container freight rates continue their downward trajectory, with the Drewry WCI falling 1% to $1,933 per FEU. Transpacific rates to US West Coast dropped to $1,882, while Asia-Europe spot rates declined 5-6% week-on-week. The anticipated pre-Chinese New Year demand peak never emerged, leaving carriers struggling despite 57 blank sailings on the Transpacific and 24 on Asia-Europe routes.
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What Happened
The global container shipping market experienced its fifth consecutive week of rate declines as of mid-February 2026, with the Drewry World Container Index (WCI) falling 1% to $1,933 per 40ft container. The Freightos Baltic Index (FBX) registered a similar level at $1,936.60 per FEU, confirming the broad-based weakness.
On the Transpacific trade, spot rates from Shanghai to Los Angeles decreased 1% to $2,214 per FEU, while Shanghai to New York fell 1% to $2,800 per FEU. The FBX data shows Asia to US West Coast rates at $1,882.60 per FEU and East Coast rates at $3,046.20 per FEU. These declines follow a steeper 12% drop to the West Coast and 11% to the East Coast in the lead-up to Lunar New Year.
The Asia-Europe trade saw even sharper declines. Xeneta reported Far East to North Europe spot rates at $2,320 per FEU (down 5.3% week-on-week from $2,466), while Far East to Mediterranean rates dropped 6.6% to $3,371 per FEU from $3,929. Drewry's data shows Shanghai to Rotterdam at $2,127 per FEU (down 2%) and Shanghai to Genoa at $2,965 per FEU (down 3%).
A critical development is the widening gap between spot and long-term contract rates on Asia-Europe. New long-term contracts for Far East to North Europe averaged $2,010 per FEU—approximately $770 below spot rates—while Far East to Mediterranean long-term rates fell 25% to $2,308 per FEU, a staggering $2,200 below spot levels. Carriers announced 57 blank sailings on the Transpacific and 24 on Asia-Europe over a two-week period in response to weak demand.
On the Transpacific trade, spot rates from Shanghai to Los Angeles decreased 1% to $2,214 per FEU, while Shanghai to New York fell 1% to $2,800 per FEU. The FBX data shows Asia to US West Coast rates at $1,882.60 per FEU and East Coast rates at $3,046.20 per FEU. These declines follow a steeper 12% drop to the West Coast and 11% to the East Coast in the lead-up to Lunar New Year.
The Asia-Europe trade saw even sharper declines. Xeneta reported Far East to North Europe spot rates at $2,320 per FEU (down 5.3% week-on-week from $2,466), while Far East to Mediterranean rates dropped 6.6% to $3,371 per FEU from $3,929. Drewry's data shows Shanghai to Rotterdam at $2,127 per FEU (down 2%) and Shanghai to Genoa at $2,965 per FEU (down 3%).
A critical development is the widening gap between spot and long-term contract rates on Asia-Europe. New long-term contracts for Far East to North Europe averaged $2,010 per FEU—approximately $770 below spot rates—while Far East to Mediterranean long-term rates fell 25% to $2,308 per FEU, a staggering $2,200 below spot levels. Carriers announced 57 blank sailings on the Transpacific and 24 on Asia-Europe over a two-week period in response to weak demand.
Why It Matters
The sustained rate decline signals a fundamental shift in market power from carriers to shippers, driven by structural overcapacity and weak demand. The failure of the traditional pre-Chinese New Year cargo rush to materialize indicates softer-than-expected consumer demand and cautious inventory management by retailers.
The massive divergence between spot and contract rates on Asia-Europe—with long-term rates up to $2,200 below spot—reveals that both carriers and shippers expect the current spot levels to be unsustainable. This spread represents a rare opportunity for shippers to lock in favorable rates for 2026, while carriers are prioritizing volume security over rate premiums.
The root cause is the industry's capacity challenge: forecasted container demand growth of 3% for 2026 against nominal fleet growth of 3.6% creates persistent downward pressure. The gradual normalization of Suez Canal routing further compounds this by releasing capacity that was previously absorbed by longer Africa diversions. Despite aggressive capacity management—81 blank sailings across major trades in just two weeks—carriers have been unable to halt the erosion, suggesting the oversupply is too significant for traditional tools to address effectively.
The massive divergence between spot and contract rates on Asia-Europe—with long-term rates up to $2,200 below spot—reveals that both carriers and shippers expect the current spot levels to be unsustainable. This spread represents a rare opportunity for shippers to lock in favorable rates for 2026, while carriers are prioritizing volume security over rate premiums.
The root cause is the industry's capacity challenge: forecasted container demand growth of 3% for 2026 against nominal fleet growth of 3.6% creates persistent downward pressure. The gradual normalization of Suez Canal routing further compounds this by releasing capacity that was previously absorbed by longer Africa diversions. Despite aggressive capacity management—81 blank sailings across major trades in just two weeks—carriers have been unable to halt the erosion, suggesting the oversupply is too significant for traditional tools to address effectively.
What It Affects
Shipper Negotiations: Beneficial cargo owners (BCOs) entering 2026 contract negotiations are in their strongest position in years. The $770-$2,200 discount of long-term rates below spot on Asia-Europe provides a clear benchmark for aggressive rate targets. Shippers can leverage the oversupply environment to negotiate not just lower rates, but also more favorable terms on surcharges, detention/demurrage, and service commitments.
Carrier Profitability: The rate environment threatens carrier margins, particularly as fuel costs and operational expenses remain elevated. The inability to make General Rate Increases (GRIs) stick—with increases in late 2025 quickly eroding—forces carriers into a difficult choice between protecting rates through capacity discipline or competing for volume to maintain market share.
Service Reliability: The extensive blank sailing programs (57 on Transpacific, 24 on Asia-Europe) create schedule uncertainty for shippers. While blank sailings support rate levels, they reduce schedule frequency and can lead to cargo rollovers, complicating supply chain planning and potentially increasing inventory carrying costs.
Trade Lane Economics: The Transpacific route's 12% rate decline to the West Coast makes it increasingly attractive relative to East Coast routing, potentially shifting cargo distribution patterns. On Asia-Europe, the Mediterranean route's steeper decline (6.6% vs 5.3% to North Europe) may influence port selection and inland distribution strategies.
Carrier Profitability: The rate environment threatens carrier margins, particularly as fuel costs and operational expenses remain elevated. The inability to make General Rate Increases (GRIs) stick—with increases in late 2025 quickly eroding—forces carriers into a difficult choice between protecting rates through capacity discipline or competing for volume to maintain market share.
Service Reliability: The extensive blank sailing programs (57 on Transpacific, 24 on Asia-Europe) create schedule uncertainty for shippers. While blank sailings support rate levels, they reduce schedule frequency and can lead to cargo rollovers, complicating supply chain planning and potentially increasing inventory carrying costs.
Trade Lane Economics: The Transpacific route's 12% rate decline to the West Coast makes it increasingly attractive relative to East Coast routing, potentially shifting cargo distribution patterns. On Asia-Europe, the Mediterranean route's steeper decline (6.6% vs 5.3% to North Europe) may influence port selection and inland distribution strategies.
What to Watch Next
Post-CNY Demand Recovery: The traditional slack season following Chinese New Year will test whether rates can find a floor. Historical patterns suggest further softening, but any signs of earlier-than-expected demand recovery could stabilize rates by March.
Q2 Blank Sailing Announcements: Carriers typically announce second-quarter capacity plans in late February/early March. The scale of blank sailings will signal carrier confidence in demand recovery and their willingness to sacrifice volume for rate protection.
New Vessel Deliveries: With 3.6% fleet growth forecast for 2026, monitor the pace of newbuild deliveries versus scrapping activity. Any delays in deliveries or acceleration in demolition could ease the supply-demand imbalance.
Suez Canal Normalization: Track the percentage of Asia-Europe services resuming Suez routing versus continuing around Africa. Each service that returns to Suez releases significant capacity back into the market, adding to downward rate pressure.
GRI Effectiveness: Carriers have announced April GRIs on multiple trades. The success or failure of these increases will indicate whether the market has found a bottom or if the downward trend will persist through Q2.
Contract Rate Benchmarks: As more 2026 contracts are finalized, watch for reported contract rate levels. If the $2,010 per FEU Far East-North Europe benchmark holds or goes lower, it will set the tone for the entire year's pricing environment.
Q2 Blank Sailing Announcements: Carriers typically announce second-quarter capacity plans in late February/early March. The scale of blank sailings will signal carrier confidence in demand recovery and their willingness to sacrifice volume for rate protection.
New Vessel Deliveries: With 3.6% fleet growth forecast for 2026, monitor the pace of newbuild deliveries versus scrapping activity. Any delays in deliveries or acceleration in demolition could ease the supply-demand imbalance.
Suez Canal Normalization: Track the percentage of Asia-Europe services resuming Suez routing versus continuing around Africa. Each service that returns to Suez releases significant capacity back into the market, adding to downward rate pressure.
GRI Effectiveness: Carriers have announced April GRIs on multiple trades. The success or failure of these increases will indicate whether the market has found a bottom or if the downward trend will persist through Q2.
Contract Rate Benchmarks: As more 2026 contracts are finalized, watch for reported contract rate levels. If the $2,010 per FEU Far East-North Europe benchmark holds or goes lower, it will set the tone for the entire year's pricing environment.