The Drewry World Container Index fell 5% to $1,859 per 40-foot container this week, marking the first weekly decrease after four consecutive weeks of gains as post-holiday season demand softens and the industry grapples with uncertainty over Red Sea shipping.

Transpacific routes experienced the sharpest declines, with spot rates from Shanghai to New York plummeting 15% to $3,254 per 40-foot container, while rates to Los Angeles dropped 12% to $2,328. The decline follows what industry analysts describe as a brief and unsustainable rally driven by general rate increases that proved short-lived once retailers completed their holiday merchandise imports.

“Drewry anticipates rates will either soften slightly or hold steady next week,” according to the index assessment, as carriers struggle to maintain pricing power in the face of weakening demand.

The Asia-Europe trade lane showed more resilience, with spot rates from Shanghai to Genoa climbing 4% to $2,193 per 40-foot container and Rotterdam rates rising 3% to $2,028.Carriers are attempting to boost rates by introducing higher FAK rates ranging from $3,000 to $3,650 per 40-foot box, effective November 15, as they position themselves ahead of annual contract negotiations.

However, the market’s underlying fundamentals remain fragile. Drewry’s Container Forecaster projects the supply-demand balance will weaken in coming quarters, particularly if normal Suez Canal transits resume following the recent Houthi ceasefire announcement.

Peter Sand, Chief Analyst at Xeneta, warned that a large-scale return to the Red Sea could have dramatic consequences for global container shipping. “Details are sketchy and you cannot base the safety of crews, ships and cargo on the word of Houthi militia,” Sand said. “Carriers need far more assurance than that and, perhaps more importantly, so do insurance companies.”

According to Xeneta, diversions around the Cape of Good Hope continue to absorb approximately 2 million TEU of global container shipping capacity, with some estimates suggesting the crisis has reduced global shipping capacity by 8%. A sudden return to Red Sea transits would flood the market with capacity at a time when demand is already weakening.

“Average spot rates from Far East to North Europe, Mediterranean and US East Coast—three trades that would ordinarily transit the Red Sea—are all down more than 50% since the start of year,” Sand noted. “A large-scale return of container ships to the Red Sea would flood the market with capacity and cause freight rates to plunge even lower across trades at a global level, not just those directly impacted by the diversions.”

Maritime security experts remain cautious about the Houthi suspension. While the risk of attacks against shipping in the Red Sea, Gulf of Aden, and broader region is considered to be significantly lower, the group retains the capability to strike commercial vessels. The conditional ceasefire adds further uncertainty, as attacks could resume if Israel restarts military operations in Gaza.

For shippers and carriers alike, the coming months present a complex calculus. Sand warned that contingency planning is essential. “Carriers are already heading into loss-making territory and freight rates are expected to fall up to 25% globally in 2026, even with no change to the situation in the Red Sea,” he said. “Shippers should be making contingency plans because a large-scale return would cause severe disruption across global ocean supply chains as services transiting Suez Canal are reinstated.”

As the industry watches developments in the Red Sea, high marine insurance costs remain a significant obstacle to any widespread return to the route, alongside lingering concerns about crew safety and cargo security.

Mike Schuler