The Drewry World Container Index fell 5% this week to $1,859 per 40- container, the first weekly decline after four consecutive weeks of increases, as seasonal demand slowed after the holiday and the industry struggled with uncertainty around Red Sea shipping.

The transific route experienced the most dramatic decline, with the spot rate from Shanghai to New York falling 15% to $3,254 per 40-foot container and the rate to Los Angeles declining 12% to $2,328. This fall was the result of a short-lived and unsustainable surge that industry analysts as a result of widespread rate increases, but which proved short-lived once retailers completed holiday goods imports.

Drewry expects rates to moderate or remain stable next week, to the assessment of the index, as the lines struggle to maintain pricing power amid weakening demand.

The Asia-Europe trade lane has shown stronger resilience, with the rate from Shanghai to Genoa increasing by 4% to $2,193 per 40-foot container, and the spot rate from Shanghai to Rotterdam by 3% to $2,028 per 40-foot container. In an attempt to boost rates ahead of annual contract negotiations, the lines are trying to introduce higher FAK rates, which will be $3,000-$3,650 per 40-foot container from November 15th.

However the fundamental underpinnings of the market remain fragile. The Drewry Container Forecaster expects the balance of supply and demand to deteriorate over the next few quarters, especially if recovery in normal Suez Canal passage is swift.

The next few months will be a complex calculation for shippers and carriers alike. Contingency planning is essential, warns Sand, Xeneta’s Chief Analyst. “Even if nothing changes in the Red Sea, expect global rates to fall by up to 25% by 206 as carriers are already in the red,” he says. “Shippers should make contingency plans, as a massive return will cause severe disruptions to the global maritime supply, as services via the Suez Canal will be back.”

As the industry watches progress in the Red Sea, the high cost of marine insurance remains a significant hurdle any large-scale resumption of the route, along with ongoing concerns for crew and cargo safety.