Freightos Baltic: Global supply chains face geopolitical shocks and pre-LNY freight surge

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Global supply chains are navigating a convergence of geopolitical disruption and seasonal market forces following a brief US military operation in Venezuela and a recalibration of American trade policy. The operation triggered the temporary closure of Venezuela’s second-largest container port, resulting in short-term disruptions to regional logistics. However, the implications for global container trade are expected to be limited, given the country’s modest annual throughput of roughly 1 million TEU and the availability of nearby alternative ports for cargo diversion.

Attention has instead shifted to developments in US trade policy, where recent decisions have injected fresh uncertainty into the regulatory outlook. The Department of Commerce has delayed a scheduled 1 January tariff increase on lumber and furniture by one year and rolled back planned hikes on Italian pasta imports. These moves, widely interpreted as efforts to temper domestic cost pressures, have complicated expectations for the direction of US trade strategy.

Market participants are now closely watching the administration’s response should an upcoming Supreme Court ruling invalidate existing country-specific tariffs imposed under the International Emergency Economic Powers Act. Such an outcome could further unsettle an already fluid policy environment, with potential downstream effects on trade flows and contracting behaviour. 

Against this backdrop, ocean freight markets have opened the year with a pronounced rate rebound, as carriers capitalised on pre-Lunar New Year demand to push through General Rate Increases. Asia–North Europe spot rates rose 9% last week to around $3,000/FEU, while Asia–Mediterranean rates surged more than 20% to approximately $4,800/FEU. Since mid-December, rates on these lanes have climbed by 23% and 45% respectively.

Despite the recent rally, the broader structural picture remains constraining. While Asia–Mediterranean rates have returned to their 2025 peak-season highs, overall Asia–Europe pricing is still roughly 40% lower year on year. The disconnect underscores the dampening effect of rapid fleet expansion, which has largely offset capacity tightness caused by ongoing Red Sea diversions.

Transpacific routes have mirrored the upswing. Freight rates to the US West Coast jumped 22% to $2,617/FEU, extending gains to more than 30% since mid-December. Rates to the US East Coast increased 12% to $3,757/FEU, up around 20% in less than a month. Unlike failed GRI attempts in the fourth quarter, these increases have so far proven resilient, suggesting Lunar New Year demand is providing short-term support.

Looking beyond the seasonal window, fundamentals remain less supportive. With total volumes projected to run about 10% below last year and vessel capacity continuing to expand, freight rates are widely expected to remain well below the peaks recorded in the previous year once holiday-driven demand fades.

Written by: Farid Muzaffar