Ocean freight rates are falling to levels not seen since early 2024, creating both challenges and opportunities for businesses shipping goods overseas. According to the Drewry World Container Index (WCI), off-contract “spot” rates for a 40 foot container have dropped to around $1,669 – a 20-month low – threatening profits for major global carriers such as Maersk and Hapag-Lloyd.

While much of the discussion has focused on the U.S. market, UK businesses should pay close attention: shifts in container shipping rates directly impact costs, contract negotiations, and strategic supply chain decisions for companies trading internationally.

Spot Rates Hit Multi-Year Lows

Off-contract or “spot” rates, which account for roughly half of all container shipments, have seen sharp declines over the past year. For instance:

  • Shanghai to Los Angeles: Down 58% year-on-year to $2,196 per 40-foot container. 
  • Shanghai to New York: Down 46% to $3,200 per 40-foot container. 

Analysts note that these rates are approaching, or even dipping below, the break even points for major carriers. This squeeze on profitability is forcing shipping companies to manage capacity carefully while giving shippers increased leverage in contract negotiations.

For UK exporters, this is an opportunity to review and renegotiate freight contracts, potentially locking in lower costs for the year ahead. Importers, meanwhile, may find themselves able to secure spot rates that are significantly cheaper than long term contract prices, providing short term financial relief.

Implications for UK Companies

For UK exporters and importers, these trends present both opportunities and risks:

  1. Cost-Saving Potential: UK businesses may be able to take advantage of lower spot market rates or leverage current market conditions to renegotiate annual contracts. For companies importing raw materials or components, this could directly reduce costs and improve profit margins. 
  2. Supply Chain Strategy: Even as rates fall, carriers are adjusting capacity through measures such as slow steaming, canceled sailings, and vessel rerouting. UK businesses need to carefully plan inventory levels and shipping schedules to mitigate potential delays. Businesses shipping high-volume products may benefit from booking early to secure space, while smaller exporters can take advantage of spot market flexibility. 
  3. Contract Timing: Many UK companies operate under multi-year shipping contracts. Current market conditions may offer a window to renegotiate terms or lock in lower rates for the next quarter. Strategic timing of contract renewals could yield significant cost savings. 
  4. Global Capacity Oversupply: The addition of new container ships worldwide is increasing supply, which is keeping rates low. UK exporters to North America or Asia should closely monitor trade lanes to avoid bottlenecks or sudden cost spikes. Diversifying routes and carriers can also provide more predictable delivery schedules. 
  5. Market Volatility Awareness: UK businesses need to be aware that while rates are low now, volatility remains a feature of global shipping markets. Economic, political, and environmental factors – including fuel price fluctuations, port congestion, and international disputes – can quickly shift freight costs. Maintaining a flexible, agile approach is key to long term resilience. 

Broader Economic Context

The fall in ocean shipping rates is a reflection of wider global trade dynamics:

  • U.S. Tariffs: Earlier tariffs have slowed trade with certain regions, reducing demand for shipping. 
  • Retail Timing Shifts: Companies like Walmart, Target, and Home Depot accelerated shipments to avoid tariffs, creating an early “peak season” and lowering demand for the remainder of the year. 
  • Overcapacity: Analysts warn the shipping industry is approaching cyclical overcapacity, potentially peaking in 2027 – similar to the slowdown experienced in 2016. 

For UK businesses, this signals a market that is likely to remain volatile. Companies that actively monitor rates and adopt flexible supply chain strategies will be best positioned to capitalise on lower freight costs.

Practical Steps for UK Exporters and Importers

Hawley Logistics recommends the following strategies to navigate this shifting landscape:

  • Monitor Spot and Contract Rates Closely: Spot rates are fluctuating rapidly. Tracking them can identify windows for cost savings and inform strategic planning. 
  • Negotiate Flexibly: With carriers under financial pressure, UK companies may be able to secure more favourable contract terms, including discounts, better transit times, or priority booking. 
  • Plan for Capacity Shifts: Slow steaming, rerouted vessels, and canceled sailings may affect delivery schedules, so early planning is essential. Consider maintaining safety stock to avoid disruption during unexpected shipping delays. 
  • Diversify Routes and Carriers: Avoid over-reliance on a single route or carrier. Exploring alternative trade lanes or regional ports can reduce risk and improve reliability. 
  • Consider Multi-Modal Transport Options: Where possible, combining sea freight with rail or road transport can optimise delivery times and cost-efficiency, particularly for time-sensitive goods. 

Looking Ahead: Opportunities in a Shifting Market

Falling rates, while challenging for carriers, present strategic opportunities for UK businesses. Exporters can increase competitiveness by lowering shipping costs, while importers may strengthen margins through smarter freight management. Companies that act decisively now – by renegotiating contracts, diversifying shipping routes, and monitoring market trends – will be best positioned to capitalise on the current environment.

Global trade remains fluid, and UK companies should remain vigilant. By partnering with a trusted logistics provider like Hawley Logistics, businesses can gain expert insight into market trends, ensure efficient operations, and navigate this period of volatility with confidence.

The recent drop in ocean freight rates offers a rare chance for UK exporters and importers to optimise costs, renegotiate contracts, and improve supply chain resilience. However, risks from volatility, capacity shifts, and global economic factors remain. Businesses that take a proactive and strategic approach can transform these challenges into competitive advantages, positioning themselves for success in the international trade landscape.