Logistics news

Global freight rates continue to decline

Tariff Hikes and Inflation Undermine Shipping Demand

Global freight rates are experiencing a downward trend as rising tariffs, surging prices, and weakened consumer confidence erode demand for international trade and transportation services. Industry experts point to macroeconomic pressures—including trade tensions and inflation—as key drivers of the softening market.

The United States is set to implement 25% import tariffs on steel, aluminum, and finished automobiles. Major trading partners such as Mexico, Canada, and China are among those significantly impacted by the wide-ranging trade measures.

U.S. Consumer Sentiment Hits Lowest Point Since 2021

According to ABC News, U.S. consumer sentiment declined more than expected in March, reaching its lowest level since 2021. Economists warn that the U.S. economy—heavily dependent on domestic consumption—could edge toward recession if these trends persist. As tariffs rise and prices climb, consumer confidence is projected to deteriorate further, contributing to reduced shipping volumes globally.

Spot Rates Reflect Real-Time Market Stress

Falling consumer confidence is already evident in the global freight market, especially in spot rates, which are considered the "heartbeat" of the container shipping industry. According to the latest Drewry Shipping Consultants report, the World Container Index (WCI) has continued its decline, dropping another 4% this week to $2,168 per 40-foot container. Despite the drop, the rate remains 53% higher than the pre-pandemic average of $1,420 per FEU.

Breakdown of Major Shipping Routes

• Shanghai–Los Angeles: Down 6% week-over-week to $2,487/FEU (35% YoY decrease)
• Asia–New York: Down 4% to $3,622/FEU (28% YoY decrease)
• Asia–North Europe: Down 4% to $2,370/40ft container (25% YoY decrease)
• Asia–Mediterranean: Down 17% YoY to $3,171/40ft container

Supply Chain Volatility: “Unimaginable” Challenges Ahead

Erik Devetak, Chief Technology and Data Officer at Xeneta, highlighted the extreme volatility of the past five years in his blog post following the TPM25 (Transpacific Maritime Conference) in Long Beach:

“If there was one overriding theme at TPM25, it’s that supply chains are now not just unpredictable—they’re nearly unimaginable. From Red Sea rerouting to tariff shocks, logistics teams have had to re-engineer their strategies in real-time. Those who fail to adapt will be left behind.”

Long-Term Contracts Could Be Affected by Falling Spot Rates

Devetak also emphasized that spot rates have been on a "rollercoaster ride" since the pandemic, with crises such as the Red Sea conflict leaving lasting impacts. The gap between spot and long-term contract rates is narrowing, which may result in soft spot pricing spilling over into long-term agreements. As these contracts are typically finalized by April 30, the current spot market holds significant strategic value.