Ocean container rates have dropped to their lowest since January 2024, putting pressure on carrier profits amid weak demand and new tariffs imposed by US President Donald Trump, reported Reuters.

The Drewry World Container Index fell to US$1,669 per 40-foot container, a 20-month low. Rates on the Shanghai-Los Angeles route dropped 58 per cent year-on-year to $2,196, below the $2,200 break-even level for carriers like Maersk and Hapag-Lloyd, according to Jefferies analyst Omar Nokta.

Spot rates for Shanghai-New York also fell 46 per cent to $3,200. Roughly half of container cargo moves on the spot market, and the gap between spot and contract rates is narrowing, said Drewry's Hind Chitty.

Retailers including Walmart and Target advanced holiday imports to avoid tariffs, triggering an early peak season and weakening prospects for the rest of the year. Analysts warn that inflation may prompt retailers to cut future shipments, further depressing rates.

Carriers such as MSC, Maersk, Hapag-Lloyd and Cosco are adding new ships to an already oversupplied market. Sea-Intelligence forecasts cyclical overcapacity peaking in 2027, echoing the 2016 price war.

Peter Sand of Xeneta said rates are nearing pre-Red Sea crisis levels, when Houthi attacks had forced rerouting and temporarily boosted prices. Carriers are now idling ships, skipping port calls and scrapping older vessels to manage capacity.

Nokta expects the fourth quarter of 2025 to be the weakest since 2023. Sand added that shippers now hold the advantage in upcoming freight contract negotiations.