TransPac Freight Rates - Q4 Forecast
By Max Leyshon
Introduction:
The Asia-US Transpacific (TransPac) route is the backbone of global container trade, moving an estimated $20-30 Billion from China to the US a month[1]. This route has become a global barometer for the health of US-China trade relations and is a global measure for the state of geopolitics and shifting consumer demand.
Since June, Transpacific spot rates have collapsed. Shanghai-Los Angeles rates fell from $5914/FEU to $2522/FEU in September[2]. During the same period there has been an influx of capacity onto the route, this has led to too many ships vying for the same cargo, consequently this has harmed carriers’ margins.
This analysis will explore the drivers of this decline, the effect on the relevant stakeholders and offer insight into the future of rates moving into Q4.
Numbers based on Drewry World Container Index – Shanghai to Los Angeles
Drivers of the Decline:
Since June, TransPac spot rates have tumbled, there are three primary drivers for this price movement: a fall in demand from importers, an influx of capacity and ongoing tariff/trade uncertainty.
Earlier in the summer, shippers engaged in heavy frontloading to move goods ahead of potential U.S tariff increases. This caused rates to rise as demand exceeded the available capacity, consequently carriers moved tonnage to the U.S West Coast to capitalise on these higher rates. However, this demand has since softened, impacting the efficiency of carriers.
The influx of new capacity has worsened the issue. With U.S. imports cooling, there is insufficient cargo to keep vessels operating above breakeven, forcing carriers to rely on blank sailings to limit losses. This oversupply has forced prices downwards as carriers compete for the same business to keep liners in operation.
The compounding factor to this is the lack of certainty for import and exporters. The sporadic nature of the US tariffs has meant companies are delaying trade actions to protect their goods against tariffs. From May 14th, 2025, China’s tariffs were 30%, much higher than the 10% levy imposed on February 1st of this year, this policy decision has harmed trade and has reduced US imports from China from $40.6 billion (July 2024) to $26.4 billion (July 2025)[3]. This decline can be attributed to Trump’s economic policy, where higher trade barriers and the absence of clear forward guidance has led companies to scale back cross-border trade activity.
Outlook for Q4 2025:
With these drivers at play, the key question now is whether freight rates will stabilise or continue their decline into Q4 2025.
The most likely scenario is these rates will continue to fall and could reach the pre-Red Sea crisis levels of $1800/FEU (China to US). Tariffs are likely to remain the dominant factor shaping rates. The pause on the 30% levy is scheduled to expire on November 10th, after which further increases are possible – which will undoubtedly put downward pressure on prices. The absence of clear policy guidance both before and after this date is expected to keep importers and exporters cautious, reducing large-volume bookings through Q4.
Furthermore, the forecast for blank sailings paints a negative picture for Q4, between 12% of schedule sailings are set to be cancelled, with over 60% of these cancelations being on the TransPac routes[4], with more expected to be announced. The sharpest impact will come in early October during China’s Golden Week, when exports pause and demand for container slots dries up. That may create a short surge in rates in late September as shippers rush to load before the holiday, but overall, the cancellations highlight weak demand and an ongoing struggle for carriers to stabilise rates.
Overall:
The Q4 forecast for the TransPac routes is looking bleak, with overcapacity and softening demand, it is unlikely rates will improve and could slump lower to the floor of pre-Red Sea crisis levels. Carriers will likely try and reverse this trend through blank sailings and reallocation of capacity to other routes, which may consequently damage the reliability of the TransPac routes. The continued volatility of the tariff situation will remain a looming problem for the route and is likely to worsen due to the uncertainty around the November 10th deadline which will further damage the demand for containers. Ultimately, this period will be a test for the shipping industry’s ability to manage a weak market and efficiently allocate capacity to other routes, while keeping fulfilment on the route as high as possible - this balancing act will likely hold until Q1 2026.
Citations:
[1] US Census Bureau: 2024/25 Trade in Goods with China
[2] Drewry World Container Index
[3] US Census Bureau: 2025 US trade in goods with China
[4] Drewry: Cancelled sailings tracker – 12 Sep 2025
