Spot prices for shipping containers fell for the first time in nearly three months on signs that demand is cooling after U.S. tariffs on Chinese goods and other trade disruptions triggered an earlier-than-usual buying season. Data released Thursday showed the Drury World Container Index fell 2.2 percent to $5,806 per 40 feet, ending a 12-week winning streak.

Asia's major container hubs are experiencing reduced congestion compared to a few weeks ago, but it remains a factor that restricts capacity and causes delays. This congestion has resulted in some vessels being redirected to other ports in the region, exacerbating the issue.

While congestion persists, there are signs of relief on the east-west main shipping routes. Reports suggest that utilization rates have dropped and freight rates have decreased after a two-and-a-half-month surge. Last week, prices on these routes fell by 1% to 4%, although they still remain at remarkably high levels. However, this decline may indicate that rate pressures have surpassed their peak.

Part of the reason for this pressure relief could be attributed to the surge in demand and spot rates witnessed over the past two months. Major carriers, as well as new smaller players, have increased their capacity on trans-Pacific and Asia-Europe routes.

The decline in rates will be welcomed news for individuals involved in international trade. However, with the demand for peak season goods likely to remain relatively high in September, and congestion still posing a challenge, the possibility of a gradual decline outweighs the likelihood of rates collapsing.

As long as the re-routing of the Red Sea continues, we should not expect prices to drop below the levels witnessed during the demand slump in March and April, when rates were still approximately twice as high as they were in 2019. Nevertheless, carriers continue to announce significant increases in General Rate Increase (GRI) and peak season surcharges for many other regions, including intra-Asia, Middle East, South Asia, and certain parts of Africa, benefiting from the surge in capacity diversion away from Asian major routes.

As demand weakens on the major trade routes, capacity should gradually reallocate back to these lower volume trades, and prices should begin to decline. In the realm of air freight, the anticipated growth in B2C e-commerce demand is expected to keep volumes and rates elevated in regions outside of China during the usual low season and the busy fourth quarter.