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Freight rates are loose and starting to fall! All routes fell except Europe and Southeast Asia.

Jul 13,2024

Freight rates end 13 consecutive increases! This opens the "Pandora's box" of price cuts? Insiders said that the current weekly situation, freight rates are gradually revised, but not flash collapse, is expected to continue to fall in July.

The latest issue of the Shanghai Container Export Freight Index (SCFI) was released on July 12. The index fell significantly, falling by 58.94 points to 3674.86 points, a weekly decline of 1.57 percent, thus ending the previous 13 consecutive weeks of upward trend. Among the four major routes, the performance of freight rates showed a trend of differentiation. Except for the increase in freight rates on the Far East to Europe route, the rest of the routes showed varying degrees of decline. In particular, the U. S.-West route, due to the temporary new capacity investment, the most significant decline in freight rates, down as much as 5.5 percent, becoming the four major routes in the most volatile decline in freight rates.

The price of the US-West route in the shipping market was originally planned to increase by US $1000 to US $8100-8500 per large box on the 1st of this month. However, due to the introduction of overtime ships and new routes, the industry leader Mediterranean Shipping (MSC) chose to maintain the original price of US $7500. subsequently,Last Saturday (7th) most shipping companies lowered their freight rates to $7900, and most freight rates have now fallen further to $7500.

Industry insiders pointed out that the US-West route was affected by overtime ships, resulting in a significant increase in supply, and the cargo volume was not as hot as before. However, due to the delay of some return ships, supply and demand offset each other. During the week, the freight rates of the US and West fluctuated greatly, while the freight rates of the US East and European lines remained relatively stable.Judging from the current weekly freight rate trend, the market is gradually correcting prices, but there will not be a sharp decline and flash collapse. It is expected that throughout July, freight rates will continue to show a slow downward trend.

Freight forwarding companies and shipping company executives also pointed out that due to the introduction of overtime ships and new routes, the current market price of US-West freight has dropped from the highest of US $8500 on July 1 to US $7500, and there are several large freight forwarding companies,Through the low long-term contract signed with the shipping company, the freight rate is lower than 7000 US dollars, and the market freight rate is likely to decline more next week.

According to industry analysis, the annual long-term freight rate signed by large and super-large freight forwarding companies and shipping companies is about US $1700 per large container, plus the peak season surcharge is about US $3500. This freight is a fixed freight (FIX ), while the in stock market freight rate is a uniform freight rate (FAK). The fixed freight rate is generally signed by shipping companies only 20% to 30%, and the freight forwarding company provides five containers at 20%, one only has to pay $3500 for shipping, the other four have to pay $7500,On average, the freight rate per large box is 6700 US dollars, so there are freight forwarding companies at the cost price of 6700 US dollars, plus 200-300 US dollars to receive goods, so there is a freight rate of less than 7000 US dollars.

Large and super-large freight forwarding companies, in view of the current situation of oversupply of space in the market, take the initiative to adopt a price reduction strategy to stimulate shipments, to show the willingness to sell profits. However, in order to obtain tariff concessions that are far lower than the prevailing market conditions, two conditions are usually required: one is to establish a long-term and good cooperative relationship with freight forwarding companies, and the other is to be a frequent customer with large shipments. It is worth noting that when there are freight rates below $7000 in the market, this move is likely to have an impact on the in stock market and shake price stability. according to this,A freight forwarding company predicts that next week's FAK (uniform rate) price reduction may be further expanded.

At present, the freight rate of the US-East route is stable at between US $9800 and US $10400 per large box, while the freight rate of the European route is maintained at the level of US $8700 to US $9000 per large box.The market is taking a wait-and-see attitude about the loosening of freight rates and whether they will be adjusted,The freight forwarding company is still waiting for the new offer made by the shipping company in the past two days.It is worth noting that the price increase plan originally scheduled for the middle of this month has been canceled under the guidance of Mediterranean shipping.

As market supply increases, the latest issue of the I tariff SCF:,

The freight rate on the Shanghai to Europe route is 5051 US dollars/TEU, up 194 US dollars,3.99 percent increase;
Shanghai to Mediterranean line freight rate of $5424/TEU, down $8,by 0.15 per cent;
The freight rate from Shanghai to the United States and West is 7654 US dollars/FEU, down 449 US dollars per week,by 5.54 per cent;
The freight rate from Shanghai to the East of the United States is 9881 US dollars/FEU, down 64 US dollars per week,down 0.64 per cent.
The Persian Gulf line was priced at $2273 per container, down $163 a week,by 6.69 per cent;
The freight rate of the South American line (Santos) is 8760 US dollars per case, down 266 US dollars per week,down 2.95 per cent.

In addition, in terms of near-ocean routes,The freight rate of Southeast Asia route (Singapore) is 753 US dollars per carton, up 23 US dollars per week., up 3.15 percent; Far East to Japan Kansai, Kanto per TEU are the same as the previous period, Far East to South Korea per TEU fell $4.

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