Ocean Carriers Line Up Hefty Rate Hikes on Oversupplied Asia-Europe Trade

Excess capacity and weakening demand continue to exert downward pressure on Asia-North Europe container rates with the various indices showing the spot market has lost more than 60% of its value since the beginning of the year.

Several carriers have announced rate increases for more than $3,000 per FEU from June 1 to try to slow the spot market slide but may struggle to find much support in an oversupplied market.

CMA CGM will be setting its freight all kinds (FAK) rate from Asia to North Europe at $3,100 per FEU on June 1, while MSC and Hapag-Lloyd will set their rate on that route at $3,200/FEU. MSC and Hapag-Lloyd are also raising their Asia-Mediterranean FAK prices, with MSC rates of about $5,000/FEU and Hapag-Lloyd at $4,500/FEU.

The asking prices are significantly higher than current rate levels. Average spot rates from Asia to North Europe on May 15 were $1,994/FEU, down from just over $5,000/FEU on Dec. 31, while Asia-Mediterranean rates of $3,156/FEU were down 42% so far this year, according to the rate benchmarking platform Xeneta.

Platts, a sister company of the Journal of Commerce within S&P Global recorded spot rates from Asia to North Europe at $1,600/FEU this week, an almost 70% decline since the beginning of January. Asia-Mediterranean rates this week were at $2,700/FEU, a drop of 50% since the start of the year.

The supply chain director for a Germany-based Asia-Europe shipper said he was seeing offers in the market as low as $1,200/FEU, which was putting pressure on carriers to slow the decline.

"I can understand the pressure carriers are under, and they are asking for more cargo but many BCOs (beneficial cargo owners) have declining cargo flows, so the market is really imbalanced,” the source said, adding that there was little chance the rate hikes would stick.

“Our demand is the same as it was at this time last year, which is a slack period. The rate increases will not be 100% but may stabilize falling prices. Whether there will be another advanced peak season is impossible to gauge, but everything is possible in this market.”

Mismatch between supply and demand

Peter Sand, chief analyst at Xeneta, said the mismatch between offered capacity and demand was keeping spot rates under pressure.

“While rates and demand are going up on trans-Pacific, spot rates are sliding into Europe,” he told the Journal of Commerce Friday.

The container shipping orderbook of 8.6 million TEUs in capacity is about 27% of the in-service fleet, according to Sea-web, a sister company of the Journal of Commerce. Just under 1 million TEUs in capacity will be delivered this year, most of it large ships that can only be deployed on Asia-Europe, while only 4,000 TEUs are set to be scrapped by the industry this year.

Only 6.5% of the available capacity is being blanked in May while carriers are deploying a record 1.12 million TEUs in the month, according to data from ocean visibility provider eeSea.

Sand noted that the tariff cuts on the China-US trade following a 90-day deal between Washington and Beijing last weekend has “changed the picture” with some cargo diverted from the trans-Pacific to Asia-Europe.

”One month of ‘frustrated cargo’ that didn’t go from China to the US and is on its way to Europe, the Middle East and South America. The congested northern European ports will be facing a rush in June on the back of this,” Sand added.

North Europe’s largest port gateways continue to struggle with persistent congestion that has delayed vessels and hampered container operations at the hubs for months. The reasons include full container yards, port strikes and slowdowns, labor shortages because of several public holidays in May, crane engineering works in some terminals and changing carrier alliance networks.

Originally published in the Journal of Commerce, May 16, 2025

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.