News / Transpacific rate war looms as overcapacity increases

A transpacific rate war now appears inevitable, as shipping lines defy supply-demand dynamics by adding capacity.

Linerlytica noted in its report this week that transpacific volumes fell 7.5% year on year last month, to just over 150,000 teu, with cargo demand muted by the impact of US tariffs, coupled with the effects of front-loading that lifted volumes in Q1 25.

Linerlytica said: “Overall volumes are expected to remain muted for the remainder of 2026, especially around the key peak season window that stretches from June to September.”

Drewry’s World Container Index showed that, as of 12 February, there was a 1% dip (on a 40ft basis) in both Shanghai-US West Coast and Shanghai-US East Coast rates, to $2,214 and $2,800, respectively, compared with the previous week.

Linerlytica said: “Demand at Asian loading ports tapered off earlier than expected before the Chinese New Year holiday. Although blank sailings will kick in over the coming three weeks, capacity will return very quickly, with additional capacity still to be added.”

Despite the cautious outlook, carriers will still be adding transpacific capacity, led by the Premier Alliance and Wan Hai, which will launch two new Far East to USWC services in April and May that will add some 12,000 teu a week. Currently, total transpacific capacity is around 5.46m teu.

ONE and Wan Hai will launch the jointly operated PS8/AP2 transpacific service on 18 May, calling at Qingdao, Ningbo, Los Angeles, Oakland, Qingdao. It will turn in six weeks and initially deploy five ships, with one skipped sailing in each cycle. ONE will operate three ships and Wan Hai two, starting with the 4,680 teu Wan Hai 517.

ONE’s Premier Alliance partners, HMM and Yang Ming, will take slots on the service.

Wan Hai GM Tommy Hsieh said, at the company’s annual media conference last month, he was optimistic about demand for transpacific cargo, citing the detours round the Cape of Good Hope and he anticpated Chinese manufacturing would pick up after the Chinese New Year holiday.

Furthermore, should the Hapag-Lloyd-Zim merger be finalised, that combined fleet will be the largest on the Far East–East Coast North America trade, with a dominant 22% market share versus Cosco/OOCL’s 15%.