Carriers' tough choice will hit shippers' wallets

Figure of the week

11.25m TEU

A new order by South Korean flagship HMM has brought the world containership orderbook to a record 11.25m TEUs. This comes as excess capacity is already a major concern for ocean carriers.

Quote of the week

“90 percent of Mexico’s foreign direct investment is just reinvestment from companies already in Mexico.” Diego Rodriguez, of Americas Market Intelligence, notes that increased FDI in Mexico does not represent a shift of supply chains away from Asia towards Mexico as the US government had hoped, but rather investment shifts.

Carriers’ tough choice will hit shippers’ wallets

Ocean carriers face a strategic dilemma in the coming months and their response will have a significant impact on shippers’ budgets . The big question for carriers through 2026 is how to manage forecast container demand growth of 3% when forecast fleet growth is 3.6%. The discrepancy between the two figures indicates that overcapacity will become worse for carriers over the coming 12 months. Do carriers then prioritize trying to prop up rates or gain market share? The first will involve an aggressive approach of blank sailings, slow steaming, and idling to reduce capacity. The second will involve taking a more relaxed approach to falling rates to gain as much custom as possible. The good news for shippers, according to Xeneta’s Ocean Outlook for 2026, is that it appears that carriers are targeting market share rather than higher rates on key Trans-Pacific lanes. At the same time, there is a clear difference in carrier strategy between the US East Coast and West Coast. Offered capacity on the US East Coast is up 35% year on year, compared to being down slightly (-2%) on the US West Coast. The difference is partly because the US East Coast is less exposed to imports from China. These account for 51% of containerized imports on the West Coast but only 24% on the East Coast. With East Coast demand proving firmer and less China-dependent, carriers have added capacity to support their market-share strategy. Another big question for shippers will be how long carriers maintain this approach on US-bound trades. The answer may come next spring, when contract negotiations begin. Carriers could shift strategy to prop up spot rates as contract pricing comes into focus in early 2026 . Shippers should watch rates closely in early 2026.

US air freight shrugs off weather-linked rate rises

Port delays caused by severe flooding in parts of Southeast Asia have driven some shippers to use air cargo . But while air freight rates out of Southeast Asia to Europe have risen in the last week by more than 9%, rates to the US have seen a slight fall. Vietnam, Thailand and Malaysia have all seen severe flooding over recent days, impacting road and port services. This has created port backlogs and has led some importers to look at alternative routings, such as via Greater China to North America. Indeed, Greater China to North America air freight spot rates have risen nearly 30% since mid-October. Industry insiders believe this is largely due to front loading before China and the US struck a trade deal in October. “There was a ramp up of volume trying to beat that November deadline,” said one industry figure. US air freight shippers should also note that spot rates out of Europe to the US are rising.

Transpacific spot rates near rock bottom point

With Freightos reporting Transpacific spot rate declines of 32% week on week to US West Coast ports, it begs the question of whether markets are reaching rock bottom point . Freightos also had East Coast rates falling 8% last week. However, WCI data had a more moderate but still worrying decline of 4% on the Shanghai to Los Angeles leg, and 6% on the Shanghai New York leg. Several carriers are reported to be offering price discounts, but their room to maneuver may be limited, as rates are on the verge of reaching the point where they will represent a loss for carriers. Carriers are planning additional general rate increases (GRIs) for December, but spot-rate declines indicate these are unlikely to hold. One industry insider said that while the markets had anticipated declines in late November, the downturn is proving more extreme than expected. Carriers now have little room to offer further discounts or allow rates to sink in return for market share. For shippers this is likely to represent a few months of relative calm as far as rates are concerned .

🤔 Did you know ?

Some of the world’s most important global ports are at risk of delays and rising freight rates due to congestion. Among ports vulnerable to significant congestion are Shanghai, Ningbo, Singapore, Los Angeles and Long Beach, according to a report by maritime intelligence company Kpler.

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