Ocean Freight Rates Expected to Drop Further in February

Ocean container freight rates are set to decline further in February, influenced by the Middle East ceasefire and Lunar New Year slowdown, prompting carriers to take steps to manage capacity.

According to Xeneta, a leading provider of ocean and air freight intelligence, average spot rates from the Far East to North Europe currently stand at USD 3,795 per FEU, while rates to the Mediterranean are USD 5,085 per FEU—representing a 22% and 13% decline, respectively, since January 1.

Early projections indicate that spot rates could drop another 5-10% across both routes starting February 1.

Rates on Far East-to-US routes also fell in January. The Far East to US East Coast average spot rate dipped 7% to USD 6,417 per FEU, while the US West Coast route saw a 14% decline, bringing rates down to USD 5,021 per FEU.

After an initial sharp drop, rates on US-bound trades stabilized in the latter half of January. However, further declines are possible in February, particularly for the US West Coast, while the US East Coast may remain more stable.

Xeneta’s Chief Analyst, Peter Sand, explained how the recent ceasefire is affecting market sentiment:

“Ceasefire in the Middle East does not suddenly mean there is now safe passage through the Red Sea for all container ships – but it is enough to cause a change in market sentiment and this has a real impact on freight rates.

“We must factor Lunar New Year celebrations in the Far East, which traditionally sees a slowdown in containerized exports at this time of year, but there is little doubt the evolving situation in the Red Sea is contributing to falling freight rates.”

Shipping lines are responding to the market shift by implementing capacity management measures.

On the Far East-to-Mediterranean route, blanked sailings are expected to increase significantly, reaching 38,900 TEU in the week of February 24, marking a 318% rise from current levels. Similarly, blanked sailings on the Far East-to-North Europe route will grow to 75,700 TEU, reflecting a 449% increase.

Sand emphasized that carriers will take proactive steps to prevent steep declines:

“Carriers will not sit on their hands while freight rates collapse. They will do everything they can to keep rates elevated and have got much smarter at capacity management in recent years.”

The first phase of the Israel-Hamas ceasefire began on January 19, lasting 42 days before moving into a second phase, which could lead to a more permanent resolution.

Sand pointed out February's significance in shaping the trajectory of freight rates for the remainder of 2025:

“February may be crucial in understanding how ocean container freight rates will develop in 2025. The ceasefire in the Middle East is set to enter Phase 2 and we will see exports increase from the Far East in the first half of the month following Lunar New Year.

“Despite the decline in January, we must remember that average spot rates are still massively elevated on the Far East fronthauls to Europe and US compared to pre-Red Sea crisis, so they potentially have a long way to fall.

“Carriers are going to find it extremely difficult to keep rates elevated, especially given the record number of ships entering service, so we could see markets collapse if there is a largescale return to the Red Sea.

“The situation is far from certain and we know how suddenly and dramatically the outlook can change in ocean container shipping. There is a still a long way to go before a lasting peace deal is agreed in the Middle East and other geo-political factors, such as Trump’s tariff proposals, could come into play and put upward pressure on freight rates.”