Finance
Falling ocean shipping rates put carrier profits at risk, analysts say
Published by Global Banking & Finance Review®
Posted on October 3, 2025
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 3, 2025
3 min readLast updated: January 21, 2026
Ocean shipping rates are plummeting, threatening carrier profits. Major routes see significant rate drops, with analysts predicting further challenges.
By Lisa Baertlein
LOS ANGELES (Reuters) -A slump in ocean shipping demand since U.S. President Donald Trump imposed a raft of new tariffs on trade partners earlier this year has helped send ocean container rates to their lowest since January 2024, threatening profits at major carriers including Maersk and Hapag-Lloyd.
The Drewry World Container Index (WCI), which tracks the off-contract "spot" rate to transport a 40-foot cargo container on major shipping lanes, dropped to roughly 20-month low of $1,669 per 40-foot container as of Thursday.
The rate for Shanghai to Los Angeles, the busiest container trade route, was down 58% from a year ago to $2,196, Drewry said.
Both of those rates are below the $2,200 overall rate major ship owners like Maersk and Hapag-Lloyd need to turn a profit, according to Jefferies ocean shipping analyst Omar Nokta.
"Rates have fallen below leading-cost operators' break-even for the first time since late 2023," Nokta said.
Maersk declined to comment on break-even rates. Hapag-Lloyd did not immediately respond.
A CLOSELY WATCHED ECONOMIC BAROMETER
Roughly 50% of container cargo moves on the spot market. That percentage can climb when spot rates fall far below a customer's negotiated contract rate.
"Currently with the drop in the spot rates, the gap is getting smaller when it comes to the major East-West routes," said Hind Chitty, senior manager, Drewry Supply Chain Advisors.
The spot rate for Shanghai to New York, meanwhile, is off 46% to $3,200, according to Drewry data.
Ocean shipping is a closely watched economic barometer since some 80% of trade moves on the water.
The United States is the biggest importer of containerized goods. Top shippers like Walmart, Target and Home Depot brought forward imports of holiday goods to avoid Trump's tariffs, ushering in an early "peak season" and dimming prospects for the remainder of the year.
Some industry experts worry that retailers, which account for about half of all container shipping volume, will pull back on future shipments as tariff-fueled inflation squeezes U.S. consumers - putting more downward pressure on rates.
Compounding the risk, major container carriers like MSC, Maersk, Hapag-Lloyd and Cosco are taking delivery of new container ships, adding capacity to an already oversupplied market.
Supply chain adviser Sea-Intelligence said the industry is approaching cyclical overcapacity that is projected to peak in 2027 at a level comparable to 2016, when the carriers were cutting prices to win customers.
"A weakened U.S. economy plus a supply glut at sea? That's a recipe for brutal rate wars, idle tonnage, and carriers scrambling to plug financial holes," industry executive turned consultant Jon Monroe said. "The question isn't if the storm hits, it's how hard."
Container carriers were booking losses in the third and fourth quarters of 2023, before a spate of attacks by Yemen's Houthis on ships in the Red Sea forced significant vessel rerouting that sucked up capacity and pushed rates into profit-making territory, said Peter Sand, chief analyst at pricing platform Xeneta.
Now, rates from the Far East to U.S. East Coast and U.S. West Coast are approaching pre-Red Sea crisis levels, Sand said.
Carriers are trying to manage capacity and shelter profits by skipping port calls, slowing down or idling ships, canceling sailings and scrapping older ships, experts said.
Still, Jefferies analyst Nokta expects the fourth quarter of this year to be the weakest since 2023.
"The tables are now turning in the favor of shippers when they enter negotiations for the next ocean container freight contract," Sand said.
(Reporting by Lisa Baertlein in Los AngelesEditing by Nick Zieminski)
Ocean shipping refers to the transportation of goods and cargo via ships across oceans and seas. It is a vital component of international trade.
A shipping container is a standardized, reusable steel box used for transporting goods by ship, truck, or train. They come in various sizes, with the 40-foot container being common.
A spot rate is the current price for transporting goods on a specific shipping route, typically used for immediate or short-term shipping needs.
The break-even rate is the minimum price that shipping carriers need to charge to cover their operating costs and avoid losses.
Container overcapacity occurs when there are more shipping containers available than needed for transporting goods, leading to reduced shipping rates and profitability for carriers.
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