Container shipping rates from Shanghai to the US West Coast have plummeted by 30%.

Medium-sized shipping companies, typically for intra-Asia routes, focused on high freight rates and temporarily entered the Asia-to-US West Coast market. Large shipping companies are also pushing for vessel size increases and launching new services. These factors have led to a surge in capacity on routes to the US West Coast, and with a potential slowdown in demand, freight rates have easily declined.

Meanwhile, the US East Coast may face port strikes this fall. In anticipation of such events, freight rates on the East Coast have only dropped by 14% from recent highs, a smaller decline compared to the West Coast. Should strikes occur, port congestion and the redirection of shipments to the West Coast could temporarily strain capacity.

However, some experts believe that global capacity supply and demand will continue to ease in the short term. The supply of new vessels is expected to remain high through 2025.

A European container shipping company executive noted rates won’t quickly drop to pre-Cape of Good Hope rerouting levels, but the market generally predicts that freight rates will weaken in the short term.