Container Freight Rates Slide Sharply as Oversupply Weighs on the Market Ahead of Lunar New Year

Global container freight rates are losing momentum as excess vessel capacity and weakening seasonal demand combine to push spot prices lower, according to the latest market data from Drewry Shipping Consultants and other industry analysts.

Drewry’s most recent weekly report shows average global container spot rates falling by 10% week-on-week, highlighting a growing imbalance between supply and demand. With the Lunar New Year holiday now just weeks away, analysts say the traditional slowdown in cargo volumes is adding further pressure to an already oversupplied market.

Simon Heaney, Senior Manager of Container Research at Drewry, noted that global economic growth is expected to slow to 1.8% this year. At the same time, the container shipping industry continues to grapple with a massive influx of new vessels. Contracting reached another record in 2024, with 4.8 million TEU ordered, pushing the total orderbook beyond 11 million TEU, roughly one-third of the active global container fleet.

“Average container ship deliveries in 2025 were around 180,000 TEU per month, while total demolitions for the entire year amounted to just 6,000 TEU,” Heaney said, underlining how limited scrapping has intensified the capacity glut.

Spot rates on the world’s busiest trade lanes have been hit particularly hard. Drewry’s World Container Index shows Asia–US West Coast rates down 12% to $2,546 per FEU, while Asia–US East Coast rates fell 11% to $3,191 per FEU. In Europe, Asia–North Europe spot rates dropped 9% to $2,510 per FEU, and Asia–Mediterranean rates declined 8% to $3,520 per FEU.

The Lunar New Year, which begins on 17 February, typically reshapes shipping demand both before and after the holiday period. According to Dynamar analyst Darron Wadey, a rate dip at this time of year has become increasingly common since 2022.

“The pattern has been a noticeable downturn in rates around this period, and these declines have often lasted a couple of months before recovering later in the year,” Wadey said, adding that the current slump is consistent with recent market behavior.

The Shanghai Containerized Freight Index (SCFI) echoed this trend, slipping 7.4% week-on-week to 1,457.86 points.

Both Drewry and Dynamar emphasized that the core issue remains excess capacity. The additional tonnage needed in recent months to support longer Cape of Good Hope routings, used to avoid the Suez Canal, has now been fully absorbed. Any newly delivered vessels are effectively surplus to requirements.

“The cumulative impact of steady and substantial vessel deliveries since 2022, combined with minimal scrapping, means the market is now showing classic signs of overcapacity,” Wadey explained. “Even with blank sailings already being announced, the underlying oversupply is likely to extend any downturn in spot rates.”

Dynamar describes the container market as increasingly volatile, warning that sharp rate swings could complicate supply chain planning and stability.

Data from Xeneta paints a similar picture, although with less dramatic weekly declines. Xeneta’s spot rate index shows comparable average rate levels in dollar terms, while capacity continues to rise month-on-month across major east–west trades. Capacity from Asia to the US and the Mediterranean is up between 9.7% and 12.3%, while Asia to North Europe capacity has dipped by 1.9%, likely due to port congestion. The transatlantic trade has seen a 6.4% reduction in offered capacity.

As the industry moves deeper into 2025, analysts warn that without a meaningful pickup in demand or a rise in vessel scrapping, overcapacity will continue to weigh heavily on container freight rates.