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U.S. line up another $2,000! In mid July, the freight rate will break through the ten thousand yuan mark.
Jun 24,2024
Large cargo companies recently pointed out that the strike in the United States and East may bring additional profit opportunities to shipping companies. Some shipping companies suchSouth Korea HMM and Japan ONE have proposed plans to raise the freight rate of US lines to US $2,000 per container on July 15.in addition,Starting from July 13, Evergreen Shipping will also adjust the peak season surcharge on the US line from the original US $600 to US $1200.
Last week, Dreary predicted that freight rates outside China would continue to rise next week due to the early arrival of the peak season. The industry speculates that this may be related to the US imposing tariffs on some goods from August 1. however, on the evening of Thursday (13th), deluri revised his views,Pointing out that freight rates from China will also continue to rise next week due to congestion problems at Asian ports.
Separately, on Monday, the International Longshoremen's Association (ILA) announced it had suspended negotiations with the U.S. Maritime Union (USMX) on new labor contracts for port workers on the U.S. East Coast and Gulf Coast. The reason for the suspension is the impact of the automation of Maersk's dedicated terminals on workers' rights. At present, the existing labor contract agreement will expire on September 30.
According to Peter Sand, principal analyst at Xeneta,Shippers have loaded imported cargoes ahead of time to cope with the traditional peak season in the third quarter amid concerns about the ongoing impact of the Red Sea conflict on the supply chain.He further said that if the eastern United States and the Gulf Coast face the risk of major damage later this year,Shippers may speed up this practice.
Although the industry generally believes that in view of the upcoming US presidential election, the government is unlikely to allow strikes to occur, but shippers are still carrying out necessary precautions, and early shipment is a direct response strategy.
However, senior officials of some shipping companies believe that US President Biden will work hard to promote a ceasefire between Palestine and Israel to support their election prospects. With this expectation, shippers may choose to delay shipments to avoid the current high freight rates. At the same time, due to the long range of the European route, the peak season starts earlier and may end earlier than the US route,Freight rates are expected to slow in the third quarter and decline in the fourth quarter.
Regarding the current price increase trend in the shipping market, the heads of the two super-large cargo companies hold different views. Company A believes that the price increase trend will continue in the third quarter, and the Palestinian-Israeli ceasefire is more difficult. It remains to be seen whether the one-time price increase of US $2,000 can be increased. Company B takes a different view, arguing that the U.S. tariff increase will lead to a reduction in market volume, thereby reducing the increase in freight rates. At the same time, note the continuous emergence of overtime ships and new routes, such as the world's top two shipping companies Mediterranean Shipping and Maersk's 2M Alliance announced on July 7 the opening of a new US-West route, affiliated to Yantian, Ningbo, Shanghai and the United States Long Beach Port. In addition, small and medium-sized shipping companies that joined the US-West route during the outbreak also plan to re-enter the market, and the massive additional capacity could shake up freight rates.
However, the two companies agree on one point:Freight rates will fall in the fourth quarter.Company A expects freight rates to start falling in November, while Company B believes they will start falling in October. Although both companies expect freight rates to fall quickly in the fourth quarter, they also admit that the shipping companies have made considerable profits in the first three quarters.
Shipping companies plan to carry out a wave of price increases on the 15th. It is expected that the US-West freight rate will rise to US $7,100-7,400, the US-East to US $8,300-8,400, and the European line to US $7,400-7,500. In addition, there are plans to increase another 1,000 US dollars per box on the European and American lines on July 1. however,It is still impossible to predict whether the increase will be doubled to $2,000 on July 15. If it does rise above $2,000, the freight rate will break through the $10,000 mark.
Large cargo companies point out that whenThe previous high freight rates have already had an impact on shipments on Middle East and African routes. As low-value products cannot afford high freight rates, the freight rates on these routes have fallen.
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