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Ocean freight rates to trek lower through rest of 2025

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Tariffs and conflict reshape global shipping routes

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Rerouting absorbs capacity, providing floor to rates

By Jeslyn Lerh

SINGAPORE, Aug 5 (Reuters) - Asia-U.S. sea freight rates

are set to drop further in 2025 as shipping capacity outpaces

demand and trade routes shift due to tariffs and geopolitical

tensions, though vessel rerouting is expected to limit some

losses, industry experts said.

Average spot rates for containers from Asia to the U.S. west

and east coasts have slumped by 58% and 46%, respectively, since

June 1 and are expected to fall further, according to shipping

analytics firm Xeneta.

Adding to uncertainty are unresolved trade talks between the

U.S. and China. Officials from the world's top two economies

last week agreed to seek an extension of their 90-day tariff

truce. The China-U.S. trade lane remains one of the most

profitable for container ship operators.

Sea freight saw a brief uptick in late May and early June as

shippers took advantage of a 90-day pause in U.S. President

Donald Trump's tariffs, but rates quickly fell as capacity

outweighed demand, Xeneta data showed.

"There is significant overcapacity globally and this will

continue to shape the market," said Erik Devetak, Xeneta's chief

technology and data officer.

"China-to-U.S. trade is dampened and the EU economy is not

exactly hot, so blanked sailings and cancellations will become a

recurring theme as carriers desperately try to keep freight

rates up," Devetek said.

Blanked sailing refers to cancelled port calls or voyages.

Logistics major DHL noted that spot rates, which rose in the

early summer surge of traffic from Asia to North America, have

since reversed.

"Carriers rushed to add capacity on the transpacific to

chase early gains, but oversupply is becoming apparent as the

momentum fades," said Niki Frank, CEO of DHL Global Forwarding

Asia Pacific.

Jarl Milford, maritime analyst at Veson Nautical, expects

rates to decline steadily in the second half when more vessels

are expected to enter the market.

"Ongoing uncertainty, including tariff policy and slowing

global demand, adds continued pressure," Milford said.

Ocean Network Express, a joint venture between Japan's

Kawasaki Kisen Kaisha ( KAKKF ), Mitsui O.S.K. Lines ( MSLOF ) and

Nippon Yusen, said last week that "recent trade

uncertainties further complicate visibility for the latter half

of the fiscal year".

REROUTING PROVIDES FLOOR

A key factor helping absorb some of the excess capacity,

however, is the rerouting of vessels from traditional sailings.

Carriers are diverting from the Red Sea following attacks by

Yemeni Houthis, and some are bypassing U.S. ports to avoid

tariffs. These longer voyages are soaking up more ships and

helping provide a floor for rates, analysts said.

"These diversions continue to soak up in excess of 10% of

containership supply, leading capacity utilization to a healthy

level in the 86-87% range," analysts at Jefferies Research

wrote, referring to the Red Sea.

And while China's exports to the U.S. have fallen, shipments

elsewhere have climbed.

Jefferies analysts said spot bookings to the U.S. in recent

weeks suggest July volumes are likely to be down, pushing

transpacific freight rates to their lowest this year, but rates

to markets such as Europe and Latin America remain elevated.