Subscribe
← The Merchant

The Merchant · n°153 · July 3, 2025

Trans-Pacific rates plunge amid peak season flop

Figure of the week

96% This is the percentage of major container ports facing logistics difficulties in June 2025, according to data from Tradlinx.

Quote of the week

“The legislation will not change.” Thomas Regnier, spokesperson for the European Commission, on Monday, June 30, in response to US pressure that would like the European Union’s digital regulations, highly protective for users, to be part of the ongoing trade negotiations.

Rates plunge in the Pacific and Europe remains under pressure

When will the uncertainty over ocean freight rates end. On the trans-Pacific route, the fall that began ten days ago continues: after the peaks of early June, the price rise between the end of May and the beginning of July is now only 6% according to Drewry’s World Container Index. This reversal is the direct consequence of the end of the massive “frontloading” phenomenon after the tariff truce between the United States and China, combined with a rapid return of excess capacity.

Conversely, prices remain stable on the Asia-Europe axis, despite the mediocre service quality and the numerous departure cancellations: the general rate increase (GRI) decided in early June appears to be holding. Toward Northern Europe, FAK rates are edging up, while they are readjusting downward toward the Mediterranean basin. Finally, there are strong tensions on exports from Europe to the United States, linked notably to the progressive increase in rates. The reasons are both structural - activity is more sustained before the summer holidays - and cyclical: the negotiations between the EU and the United States have still not been concluded, while the truce decided on April 9 ends on July 9. The parties are showing confidence. For now.

Indeed, the uncertainty of recent months has weighed on global traffic, and therefore on freight rates. The suspension of a large part of the tariff measures initially announced by the Trump administration had only little impact on freight rates: according to the firm Drewry, the recent price drop is explained more by the weakness of demand than by a lasting effect of the US-China tariff pause. Indeed, the volume increases observed in May and June at US ports, from Los Angeles to Long Beach, did not durably reverse the trend. Symptomatically, the fall in rates over the past two weeks confirms that trade is beginning to slow after several weeks of increase in May and early June. For many analysts, the volatility of rates to come will persist as long as US tariffs remain illegible over time… It is time to free the industry’s professionals from “Liberation Day”!

Remedies for congestion?

We already told you about it last week, but as the situation worsens, we can only tell you again about the new scourge of the century: port congestion! According to Tradlinx data, 96% of the world’s major container ports are currently experiencing operational disruptions.

In some major hubs such as Rotterdam, Singapore or Cape Town, waiting times can exceed 10 days. In Northern Europe, the situation is particularly critical: Rotterdam, Antwerp, Hamburg and Bremerhaven are experiencing their worst operational crisis since the pandemic of 2020. In short, on a global scale port congestion jumped by 300% in June 2025, fueled by a combination of strikes, unfavorable weather conditions, logistics bottlenecks and persistent imbalances in supply chains. But the situation is not limited to Europe: as of June 30, worldwide, 17 simultaneous strikes were affecting the logistics sector, whether in ports, customs or even postal and rail services. The chain is seizing up at all levels: carriers must adjust their schedules, avoid certain port calls and impose surcharges. All this compromises the reliability of supply chains - not to mention the additional costs for exporters.

Precisely, in this worrying context, industry professionals are organizing. Lars Jensen, founder of Vespucci Maritime, noted in a post on July 1 that some shipping companies were refining their congestion management by relying on detailed reports, which are updated very regularly. This is for example the case of Ocean Network Express (ONE), which launched a mechanism of this type for Europe and Africa. In parallel, the analytics firm Linerlytica launched a platform to track the situation on a global scale. These initiatives make it possible to better navigate the troubled waters by optimizing routes or adjusting port calls. In a context of extreme logistics and geopolitical tension, they are a reminder that adaptability is the watchword for surviving and growing.

Difficult years ahead?

For now, shipping companies are experiencing a complicated year 2025 - like many industry professionals. In its white paper for the second quarter, the Carrier Rate Report, FreightWaves notes that they have had to face numerous challenges, notably extreme weather conditions and a series of trade wars that are dismantling global logistics chains. In this context, margins have been compressed by weak demand, which the “frontloading” effects, before the announcement of the tariff measures and then after their suspension by the Trump administration, were not enough to counterbalance.

In the short term, another threat looms over the sector: the possible calling into question of the antitrust exemptions that carriers enjoy. The Federal Maritime Commission (FMC), whose activity is expected to be extended by Congress until 2029, is questioning the validity of the World Shipping Council’s (WSC) cooperation agreement. The FMC considers that the latter does not act directly as a carrier and should therefore not be protected by the US shipping law. In the event that this exemption were to be lifted, carriers could lose the ability to coordinate their actions on certain non-commercial matters (safety, environment). More generally, this could open the way to lawsuits in the United States for violation of antitrust legislation…

How, then, can one be surprised that the outlook for the coming years is not rosy? According to a recent HSBC report, the next three years will be less bright than those that have just passed: excessive supply and persistent geopolitical tensions could weigh heavily on margins. The companies should remain profitable, even as rates would be declining. The report thus anticipates that the Shanghai Containerized Freight Index (SCFI) could fall by 35% in 2025 and 2026, and again by 15% in 2027.

The situation would be far less dramatic than the crisis experienced in 2019, but the sector seems condemned to go through a new downward cycle, very far from the peaks reached between 2021 and 2024.

👋 See you next week, The Merchant team

Sources

Go further

How much does a freight forwarder cost, and how to avoid hidden fees? → How to import from China to Europe, step by step → BAF, GRI, demurrage: how to read the surcharges on your freight invoice →

← The Merchant Subscribe to The Merchant