Industry news

While the US routes kicked off August with a flurry of rate hike announcements and GRIs, the Europe route is moving in the opposite direction. The latest SCFI data has drawn a clear dividing line: US West Coast up 12.5%, US East Coast up 12.6%, while over the same period, North Europe fell 3.7% and the Mediterranean fell 3.7%. This is not a random one-week fluctuation but a sustained reflection of weakening on both the demand and supply sides of the Europe route.

Demand side: Peak season restocking winds down, marginal bookings weaken

Shanghai Shipping Exchange data from 31 July shows the Shanghai–North Europe base port rate at $3,039/TEU, down $116 week-on-week, a decline of 3.7%. The Mediterranean route stands at $4,189/TEU, down $162 week-on-week, likewise a drop of 3.7%. Both European directions declined in tandem, without the structural divergence of a "Europe-Mediterranean split"—indicating that this round of falling rates is not a localized port or route issue, but a broad weakening in overall demand.

From a timing perspective, the peak season restocking window for European retailers and supermarkets is drawing to a close. The European market's stocking rhythm for Christmas and winter runs earlier than the US routes, and by August the market enters the customary seasonal lull of "going on holiday, orders contracting." Weekly reports from multiple research institutions all point to the same conclusion: overseas BCO booking demand and regular FOB cargo demand began to weaken in late July and are weakening further at the margin in August. The container shipping industry weekly from Nanhua Futures also confirmed the signal that "European retailer peak season restocking is entering its final phase, and Europe-route bookings are marginally weakening in August."

This forms a clear contrast with the US routes, where the peak season has only just begun—the shipment surge driven by back-to-school and Christmas restocking kicked off in August and can sustain into September or even later. The Europe route's demand cycle is at least a month and a half ahead and is already winding down by August.

Supply side: Capacity is still being added, carriers have limited room to cut supply

Demand is moving down, but capacity is moving up. Data from China Shipping Gazette shows that planned capacity deployment on the China–Europe route for Week 31 (2 August) was approximately 400,000 TEU, rising further to around 419,000 TEU in Week 32 (9 August), continuing to expand on a week-on-week basis. The broader backdrop is that global newbuilding deliveries are still ramping up and the idle rate for large vessels remains low, leaving carriers with very limited scope to "contract supply simply by idling capacity."

At present, carriers' primary tool for addressing overcapacity is blank sailing—proactively cancelling voyages to control space supply. But blank sailings are a double-edged sword: cancel too many and market share is handed to competitors; cancel too few and space becomes oversupplied, keeping freight rates under pressure. Taking the Asia–Mediterranean route as an example, planned capacity grew by more than half, and while cancelled capacity also increased by nearly 160%, the absolute volume is still difficult to fully offset the influx of new vessels. The net effect is "slowing the decline" rather than "halting the fall and rebounding."

Spot market: Carrier strategies begin to diverge

Against a backdrop of ample capacity and fading demand, carriers' pricing strategies are splitting.

Maersk has opted for a "price stability" approach. Its 40-foot container rate for Week 33 was held flat at $4,600, refusing to follow the market's downward trend. The logic of this strategy: rather than join a downward price spiral, it is better to hold the line and rely on existing customer stickiness to maintain per-box revenue.

Within the Ocean Alliance, OOCL's regular FAK rate is being maintained in the $5,000–$5,100 range, with consolidation cargo rates slightly lower—a broadly neutral strategy. The PA Alliance has been faster in cutting rates, with ONE and Yang Ming launching special offers of $4,200–$4,300 per 40-foot container for specific sailings, a further discount below the market average.

Divergence in quotations is itself a signal of a weakening market. When demand is ample, carriers typically push rates up in unison; when demand support is insufficient, different alliances, varying by customer mix, vessel utilization, and route profitability thresholds, drift into a game of "some holding rates, some cutting." Every divergence marks a loosening in the sellers' camp and expanding bargaining room for buyers.

SCFIS declines: Support from earlier high-priced settlements begins to loosen

The SCFIS Europe route index, which better reflects actual settlement levels than the SCFI, recorded 3,718.93 points for the week of 27 July, down 135.89 points from the previous week's 3,854.82, a decline of 3.52%. This is the first notable week-on-week drop in nearly two months.

SCFIS lags behind spot market quotations and reflects the actual settlement prices of freight contracts concluded in prior weeks. The fact that it has started to turn downward means that previous transactions at relatively high levels are gradually being cleared out, and the prices of newly signed freight contracts are feeding through to the downside. For shippers, this signal carries more weight than the weekly SCFI quotation—it tells you that carriers are already receiving less money.

Geopolitical risks remain but cannot prop up rates

The detour around the Red Sea, the sharp drop in Bab el-Mandeb transit volumes, tensions in the Strait of Hormuz—these geopolitical factors have a far more direct impact on the Europe route than on the US routes. After all, Europe-bound vessels and cargo naturally transit the Red Sea and Suez Canal, and the additional sailing distance and fuel costs from rerouting fall entirely on the Europe route.

But geopolitical risk premiums can only act as a floor; they cannot determine direction. Currently, weak demand is dominating pricing, and geopolitical factors are more about amplifying volatility rather than reversing the trend. Guangzhou Futures' assessment is blunt: if tensions in the Red Sea escalate, the risk premium will push up front-month contracts; if the situation eases, the market will revert to fundamentals and give back those gains. In other words, Europe route rates are now in a position of "weak fundamentals with a geopolitical risk premium floor"—there is a downside cushion, but upside momentum is lacking.

August for the Europe route: Most likely a sideways-to-downward trajectory

Xeneta Chief Analyst Peter Sand has already laid out his view: "The Europe route could be heading down." The downward trend on the spot side has not yet reversed. Some sailings in early August have already had 40-foot container rates trimmed to the $4,200–$4,300 range, and carriers continue to diverge in their pricing and discounting. Looking further out, the pace of new vessel deliveries continues to outstrip cargo volume growth, making downward pressure on the rate midpoint the most likely scenario.

In the near term, there are two variables that could alter the Europe route's trajectory: first, whether carriers dare to implement blank sailings on a large enough scale to truly cut capacity to a level that reverses supply and demand; second, whether the Middle East situation escalates sharply, forcing more vessels to reroute around Africa and driving up effective capacity absorption. Until these two signals clearly emerge, the fundamental assessment for Europe route rates is: sideways with a weak bias, under downward pressure.

Disclaimer: This article is compiled based on publicly available market data and industry analysis. Freight rate information is current as of 4 August 2026. Rate benchmarks and market quotations fluctuate in real time with supply and demand and do not constitute pricing references or business advice. Actual shipments are subject to the latest quotations from shipping lines and freight forwarders.