Pork Cycle in the Shipping Container Market. Where There’s a Down, There Will Be a Up [ANALYSIS]

The World Container Index (WCI) fell by 3.3% in the last week. This marks the sixth consecutive decline in freight in the container shipping market, Drewry reports in a recent press release. The decline follows an earlier period of rate volatility caused by higher tariffs on US imports. Changes in container ship freight and charter activity are reminiscent of a hog cycle. Experienced operators and logisticians are preparing for autumn surges in certain market segments.

Interestingly, lower container shipping freight rates occur amid high container ship load and high demand for cargo space. Consequently, few container ships are idle and waiting for cargo at anchorages.

The demand for container shipping is driven by the large supply of containers in Chinese ports and the increased demand for containerized cargo in ASEAN countries, as well as in the European market, and other markets. According to data released by the Chinese Ministry of Transport for the period from January to June 2025, Chinese ports handled a total of 8.9 billion tons of cargo, representing a 4% year-on-year increase.

Źródło: Drewry Sypply Chain Advisors, July 29, 2025

China Drives the Market
“Domestic trade volumes increased by 5% year-on-year, and international trade volumes by 1.8%. Container volumes reached 170 million TEU, a 6.9% increase compared to the same period last year,” reports Katherine Si, China Correspondent, “Seatrade Maritime News.”

Large container ships were particularly busy, as significant increases in container supply were recorded at China’s largest container terminals. During the first six months, several Chinese ports experienced particularly high volumes.

The highest volumes were recorded at terminals in Shanghai, Ningbo-Zhoushan, Shenzhen, Qingdao, and the Port of Guangzhou. Large container volumes were also handled in Tianjin, Xiamen, Suzhou, the Beibu Bay area, and at the quays of the Port of Rizhao.

Source: Drewry Supply Chain Advisors, July 29, 2025

Sudden increases in US import tariffs in the first half of the year led to a decline in cargo volumes between China and the US. This decline was offset by demand from ASEAN countries and EU markets, according to a “Seatrade Maritime News” correspondent.

However, the high supply of containers and the continued demand for cargo space did not result in an increase in freight rates for container and containerized cargo between major markets. Rates have been falling consistently since mid-June, indicating that the initial impact of the tariffs on the market was not lasting.

Spot rates at the bottom of the wave

Spot rates on trans-Pacific container lines have fallen in the past week. On the Shanghai-Los Angeles route, they fell by 5% ($2,675/FEU), and on the Shanghai-New York route, by 7% ($4,210/FEU). “Due to the temporary suspension of higher US tariffs on Chinese products, which ends in mid-August, shipping lines are reducing services across the Pacific and canceling further sailings,” analysts explain. As the pre-tariff surge has ended, Drewry expects spot rates to decline further on this trade lane next week.

Drewry’s Container Forecaster predicts that the supply-demand balance will weaken again in the second half of 2025, causing spot rates to decline further. The volatility and timing of rate changes will depend on Trump’s decision on tariff levels. Freight will also be impacted by restrictions related to the imposition of US penalties on Chinese vessels. If this occurs, a shortage of cargo space can be expected on container ships on routes between China and the US, as well as on other services operated by vessels built in Chinese shipyards.

Despite these threats, Alphaliner does not currently anticipate drastic fluctuations in container ship supply on the main routes between the continents. “The continued concentration of imports from the US – following the apparent postponement of mutual tariffs – is expected to keep the container shipping fleet stable in the coming weeks,” analysts say.

Źródło: Alphaliner, July 29, 2025

Idle Container Ships in the Minority

Alphaliner states that “At the end of June, the number of commercially idle ships was just 65.” This means that only a small number of ships, totaling 161,295 TEU, or 0.5% of the entire fleet, were idle. It emphasizes that “no ship over 18,000 TEU was idle, and only eight ships in the 5,000–18,000 TEU range were idle in commercial services.”

Shipowners primarily idled small vessels. Over the past two weeks, smaller vessels remained the primary targets for commercial idling. Vessels under 1,000 TEU accounted for 45% of the total, while ships in the 1,001–3,000 TEU category accounted for a further 37%, Alphaliner found.

 

Source: Alphaliner, July 29, 2025

Shipowners are still contracting new vessels despite fleet oversupply. As a result, the number of vessels contracted at shipyards has increased slightly. At the end of June of this year, shipyard portfolios included 161 vessels with a total capacity of 755,184 TEU, compared to 146 vessels and 697,434 TEU in mid-June.

The container shipping market is experiencing a freight slump. This means that operators will do everything they can to increase freight and recoup low revenues whenever they have the opportunity. Will the hog cycle effect also affect the container market? We’ll see by the end of the year.