Box charter to freight rate ratio hits record high of 289%

Containership utilisation has slipped below 90% on many of the sector’s biggest tradelanes, while the gap between box freight rates and charter rates has hit an all-time high.

Data from Linerlytica shows boxship utilisation on three of the four main tradelanes has fallen below 90%. Splash estimates suggest that at today’s freight rates, liners can remain profitable with utilisation at 80%. However, rates have been falling all year long, with a huge volume of newbuilds entering service.

“The unabated demand for ships is keeping the charter market high despite the freight market slump,” Linerlytica noted in its latest weekly report, noting how the charter to freight rate ratio has reached a record high of 289%.

“If cargo demand fails to rebound to drive a freight rate rally, a charter market correction could be due soon,” Linerlytica warned.

“If carriers fail to stabilise freight rates, we could see an increase in surplus tonnage being released into the market,” broker Braemar suggested in a container briefing published yesterday.

Liner shipping profits are forecast to slide by more than 80% this year.

Analysts at Sea-Intelligence have calculated that the container shipping industry made a combined EBIT last year of $60bn, the third-highest figure recorded in the history of the business, and the highest outside the covid era.

One leading container markets analyst, John McCown, who runs New York-based Blue Alpha Capital, is expecting the liner sector to remain in the black this year, albeit with profits sliding to below $10bn.

Container spot rates have been on a constant slide in 2025. The overall Shanghai Containerized Freight Index is now down 47% since the start of the year.

Prices on Asia to North Europe, Asia to the Mediterranean, and on the transpacific to the US west and east coasts are now all lower than at any point in time in 2024, according to data from Drewry.

However, comparing spot rates now to the level seen in mid-December 2023 just before the Red Sea shipping crisis, Asia to North Europe remains up 74%, Asia to the Mediterranean remains up 96%, while voyages across the Pacific to both the west and east coasts are still up by more than 40% compared to the lows experienced towards the end of 2023.

“Continued softening in the spot market comes against a backdrop of weaker than usual volumes post-Lunar New Year, increased competition between liner companies amid alliance restructuring, and widespread uncertainty brought about by an ongoing series of tariff announcements from the US and its trading partners,” commented Clarksons Research in a weekly report.