Drury: Container rates are down, and there's a lot of unpredictability going forward
The Drury World Container Index (WCI) recorded a 6 percent weekly decline (more than 15 percent in two weeks) to trade at $2,629, its lowest level since it recorded a 60 percent gain to $2,670 when it was first quoted in 2024.
In essence, this is the lowest offer recorded by WCI after the Red Sea disruption era. Prices in most major trade lanes have indeed fallen back to 12-month lows, with a major share of the latest quotes coming from Asia-US trade.
Asia-us East Coast data showed a 22% decline in container rates, while Asia-US West Coast data showed a 21% decline in container rates. While there will be huge fluctuations in supply and demand capacity in 2025, with container fleet capacity increasing by about 1.5 million TEUs, and schedule reliability suffering as new alliances lead to the restructuring of ship capacity, wait times, which soar during the Chinese New Year, have fallen. However, disruptions do exist in some places - for example, the availability of rail rolling stock in Canada records significant holdup times.
While shippers, freight forwarders and carriers have strategies in place to address and quell this issue, the upcoming tariffs imposed by the U.S. government on cargoes/cargoes from China, Canada and Mexico may temporarily halt the decline in rates until the end of the first quarter of 2025, when General rate increases (GRIs) kick in.
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The imposition of tariffs is also expected to cause some ships to be redirected to Canada's west coast (for goods originally destined for the United States) and further burden the last-mile supply chain and the availability of rail cars and truck chassis. While the market is focused on the possible impact of tariff moves in terms of scheduling and cost, there is also news of tariff reciprocity between the United States and the European Union.
Despite a lot of unpredictability in March 2025, Drury's comments say they expect rates to continue to fall next week due to increased capacity.
