Asia to U.S. Freight Rates Are WAY UP, Nearing Post-Pandemic Record

It’s possible freight rates from Asia could reach new record highs. I know it’s not what U.S. importers like to hear, but freight rates are way up from Asia right now due to a number of factors: peak season demand, persistent port congestion/disruption at Asian ports, and oil prices linked to the Iran War.

Stuart Chirls reports in FreightWaves:

Rates from the Far East to the U.S. West Coast reached $7,960 per forty foot equivalent unit as of Sept. 17, while Far East-U.S. East Coast prices climbed to $11,259 per FEU. Both trades have more than quadrupled since late February, before the Hormuz crisis disrupted global shipping markets.

There is context worth mentioning on those freight rate numbers quadrupling.

Freight rates had fallen extremely low in February. Seasonally, freight rates are normally lower that time of year. This year, there was a severe post-holiday shipping slump with demand pushed down even more from prior front-loading of goods to beat tariff deadlines. Overcapacity created additional downward pressure on freight rates, causing them to reach “break-even” lows for carriers. Carriers were in danger of suffering losses from the low freight rates just before the Iran War hit, disrupting ship traffic and oil flow through the Persian Gulf.

The combination of the low freight rates the market saw in February to the extra high freight rates we’re seeing now makes the rise all the more dramatic. Still, freight rates would have to rise nearly 18% on Asia to U.S. West Coast (USWC) routes to break the all-time high record and more than 11% on Asia to U.S. East Coast (USEC) routes to do so, according to the data in Chirls’s article. Both are still significant increases.

The article takes time on Xeneta Chief Analyst Peter Sand saying the Asia to USEC is more likely to set a new record high. That should seem obvious with it being closer to the record-high. What may not be obvious to readers of the FreightWaves article is there are more factors than the Iran War pushing freight rates up.

Not Just the Iran War

Blurbs like the following from the FreightWaves article make it sound like the Iran War is, if not wholly then mostly, responsible for the high freight prices:

“If a freight rate record is broken, it is most likely to occur on the trade into U.S. East Coast,” Sand said. “But even if we do not see a new all-time high, the fact we are even discussing the possibility demonstrates how sensitive critical ocean container shipping trades are to geopolitical forces and how a regional conflict in the Middle East can have major implications at a global level.”

Higher oil prices certainly play a role. However, seasoned shippers know port congestion and peak season are both regular drivers of freight rate increases.

Port congestion has been an ongoing issue at Asian ports for quite some time, and it’s been exacerbated by disruptions from four summer typhoons – Bavi, Noul, Dolphin, and Saudel – hitting the ports over the last couple months.

Meanwhile, this peak season is still going strong, defying analysts’ predictions that it would fizzle out by now. In fact, according to an article by Charlotte Goldstone in the Loadstar, September US imports are expected to reach 2.3m TEU – approximately 10% above the same month last year.” Rather than shipping demand dying this month, September is on track to be the busiest month of the year for U.S. imports.

Another factor coming into play that especially adds to Asia to USEC freight rates is that the Panama Canal has been decreasing the number of transits per day it allows again.

Thus, even without the Iran War, everything was in place for freight rates to surge. Now add the Iran War and the potential to break record highs comes into play. With the Iran War continuing, there will likely still be more oil-related surcharges that have the potential to break records shippers never want to see broken.

U.S Extends Trade Deal with China

Perhaps on the good news side of thing for shippers, we shouldn’t see new tariffs on Chinese goods this year.

The trade deal between the U.S. and China is being extended until January 10th, as reported by Dorothy Li in the Epoch Times. Li writes:

The United States and China have agreed to extend the trade truce for two months, Treasury Secretary Scott Bessent said Wednesday, after another round of talks with his Chinese counterpart, He Lifeng.

…

Currently, the United States and China are in a one-year trade truce, reached after a bilateral summit between President Donald Trump and Chinese leader Xi Jinping in October 2025 in Busan, South Korea. It’s set to expire on Nov. 10.

Of course, the thing to watch out for here is if China’s trade relationship with Iran ruptures the trade war truce between the U.S. and China. China is by far Iran’s largest trade partner when it comes to oil, purchasing around 90% of Iranian exported oil before the Iran War began. The war and pressure from the U.S. has significantly impacted China’s purchasing of Iranian oil, but the issue remains potentially volatile for trade between the U.S. and China.