The Drewry Intra-Asia Container Index (IACI) fell 4% to $1,035 per 40ft container, marking the second consecutive weekly decline as early peak-season demand begins to cool. Despite this dip, current rates remain 88% higher than pre-conflict levels, according to data from the London-based maritime research consultancy Drewry.
Why are intra-Asia freight rates trending downward?
The recent decline in spot rates is largely driven by a stabilization in volume following an early surge in peak-season activity. Drewry reports that trade lanes connecting China to Southeast and South Asia have seen the most significant downward pressure. Specifically, rates from Shanghai to Jawaharlal Nehru Port dropped 6% to $2,155 per 40ft container.
Congestion relief has also played a role in pricing. In Manila, average vessel waiting times fell by four hours in the second week of June, contributing to a 3% rate decline on the Shanghai–Manila route to $555 per 40ft container. This follows a sharper 26% drop recorded the previous week. Similarly, rates from Shanghai to Laem Chabang have trended downward to $974 per 40ft container.
Despite the recent cooling of spot rates, the intra-Asia container freight market remains 47% higher year-over-year. This resilience is attributed to early seasonal demand combined with elevated shipping costs linked to ongoing geopolitical instability.
How are carriers adjusting to market shifts?
Shipping lines are actively reconfiguring their networks to maintain efficiency amid shifting trade patterns. CNC, the intra-Asia arm of CMA CGM, recently revised its KCM2 service—which connects South Korea, China, and the Straits—by removing calls at Shantou and a second Busan stop in favor of a new weekly northbound call at Xiamen. The service continues to utilize seven vessels ranging from 4,200 to 4,400 teu.
Meanwhile, MSC has expanded its South China–Central Vietnam Lang Co Express service, reinstating port calls at Nansha, Ho Chi Minh City, and Singapore. These adjustments come as Southeast Asia solidifies its status as a primary manufacturing hub. According to Drewry, Chinese companies are increasingly investing in the region to bypass US–China trade tensions and mitigate tariff risks.
What is the outlook for the Middle East trade lanes?
While intra-Asia routes are seeing rate fluctuations, Middle East lanes are showing signs of stabilization. The market remains influenced by geopolitical volatility, particularly regarding the Strait of Hormuz. Although an interim US–Iran agreement previously led to the reopening of the waterway, the situation remains fragile following recent vessel attacks.
Market uncertainty persists as stakeholders monitor the implementation of regional agreements. For the immediate future, Drewry anticipates that intra-Asia freight rates will remain broadly stable throughout July, provided that capacity additions and manufacturing shifts continue at their current pace.
With volatility still present, procurement teams should prioritize flexibility in their logistics contracts. As Drewry indicates the index remains significantly elevated compared to historical baselines, hedging against potential disruptions in the Middle East remains a prudent step for supply chain managers.
Frequently Asked Questions
Why did the IACI drop this week?
The 4% decrease is attributed to an easing of early peak-season volume surges and a reduction in port congestion at key hubs like Manila, according to Drewry.
Are freight rates expected to continue falling?
Drewry projects that freight rates will remain broadly stable for the coming weeks, rather than continuing a sharp downward trajectory.
How do US–China trade tensions affect intra-Asia shipping?
Ongoing trade tensions are prompting Chinese firms to shift manufacturing and investment into Southeast Asia to maintain global market access, which in turn influences the demand for intra-Asia shipping capacity.
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