Capacity Math and Soft Demand Point to Further Rate Declines
Spot rates on the major east-west trades continued their multi-week slide this month as the pre-Lunar New Year cargo pulse failed to appear and carriers blanked sailings at rates well above historical norms. Drewry’s World Container Index stood near $1,960 per FEU in early February, with Shanghai–Los Angeles around $2,240 and Shanghai–Rotterdam near $2,160. Forwarders reported actual paid Transpacific West Coast levels already touching $1,450–1,500, close to many carriers’ variable costs.
The structural picture is clearer than the weekly noise. Net fleet growth is projected at 6–8 percent this year against demand growth of roughly 2.5–3.5 percent, according to several analysts tracking the orderbook. Newbuild deliveries are running at a historic pace—roughly 2.1–2.4 million TEU expected in 2026 alone—while scrapping remains limited. The orderbook still exceeds 30 percent of the active fleet. Even with aggressive blanking programs (dozens of Transpacific cancellations in single weeks), the capacity overhang is not disappearing.
Red Sea diversions continue to absorb an estimated 8–9 percent of effective global capacity through longer Cape of Good Hope routings, and bunker adjustment factors still add several hundred dollars per FEU on Asia–Europe. Conversations with network planners at two major carriers this week, however, indicated that security assessments for a gradual return to Suez are advancing. One network director noted that Maersk had already completed limited successful passages and that contingency planning for partial resumption is underway. A full or substantial reopening would release significant effective capacity into an already soft market.
Long-term contract negotiations for Far East–North Europe have settled near $2,010 per FEU in recent rounds, below many current spot levels and well below late-2025 peaks. Shippers are locking in volume security at these rates. On the Transpacific, carriers have cut some FAK levels sharply; one major line reduced its March Asia–North Europe FAK by roughly a quarter from earlier peaks.
Taken together, the capacity pipeline, weak seasonal demand, and the rising probability that Red Sea diversions will ease rather than intensify point to continued downward pressure. On the Asia–Europe and Transpacific lanes, a further decline of 20–25 percent from early-year levels by mid-year is a reasonable base-case outcome if security conditions improve and no major demand surprise materializes. Carriers will continue to blank and slow-steam, but the sheer volume of new tonnage limits how much rate support those measures can sustain once the artificial tightness from diversions begins to unwind.
