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Freight rates continue to fall across the line! US West into the hardest hit area
Jul 22,2024
Affected by the new capacity, the Shanghai export container freight index fell for two consecutive weeks, and the European and American ocean routes fell across the board, especially the US-West route. Industry insiders believe that the freight rate correction is related to the increase in capacity. It is expected that the freight rate will still decline next week but the decline will narrow. At the same time, new ship deliveries increased significantly in the first half of the year, and more capacity was delivered in the second half of the year, intensifying market competition.
Affected by the significant impact of the new capacity, the latest Shanghai Export Freight Index (SCFI) announced on the 19th fell by 3.6 to 3542.44 points. This has been a downward trend for two consecutive weeks, and the decline has expanded. The four major ocean routes in Europe and the United States all suffered a decline of more than 1%. It is particularly noteworthy that the US-West route of about 10 newly added or restored eastbound trans-Pacific routes is the hardest hit area, with a weekly decline of 6.92 per cent.
Analysts in the international logistics industry pointed out that after a period of sharp rise in freight rates, there will naturally be a correction, and the Red Sea crisis and the expiration of labor contracts on the east coast of the United States at the end of the year are still important keys to the market. In addition, some shipping companies chose to deploy small ships to the US-West route to compete for cargo, which further increased the supply of capacity and had a significant impact on freight rate performance in the past two weeks.
The senior management of freight forwarding companies and shipping companies also revealed that with the increase in the number of overtime ships and the continuous introduction of new routes, the freight rate of the US-West route has dropped from the highest point of US $8500 on July 1 to the current US $6700-6900. range. At the same time, freight rates on the US-East route also fell from a peak of $10400 to about $9800. It is expected that the market freight rate will continue to decline next week, but the decline will be narrowed.
According to Alphaliner statistics, a total of 271 new ships were delivered worldwide in the first half of the year, with a total capacity of 1.68 million TEU, of which the second quarter was the peak of ship delivery, with an average monthly delivery of 315000 TEU. As of now, the total global capacity has reached 30.266 million TEU, a record high. It is expected that 1.49 million TEU of additional capacity will be delivered in the second half of the year.
Freight forwarding industry insiders stressed that the high freight rates on European and American routes have attracted a large number of overtime ships into the market, as well as the introduction of new route services to compete for supply, which are the main reasons for the decline in freight rates. Among them, due to the high turnover rate of ships, the US-West route has become the hardest hit area, and the in stock market price has dropped to 6 characters, with a cumulative decline of more than 1000 US dollars.
Even if the freight rate is loose, the SCFI freight rate index has fallen for two consecutive times, with a cumulative decline of only 191.36 points and 5.13 percent. Compared with the 13 consecutive weeks of increase from early April to early July, there is still a 1.03-fold increase, and the shipping company is still making a lot of profits.
SCFI Latest Freight Index:
-
Shanghai to EuropeFreight rate of $5000/teu, down $51,weekly decline of 1.01 percent; -
Shanghai to the MediterraneanFreight rate of $5361/TEU, down $63,weekly decline of 1.16 percent; -
Shanghai to West AmericaFreight rate of $7124/FEU, down $530,weekly decline of 6.92 percent; -
Shanghai to MeidongFreight rate $9751/FEU, down $130,The week fell 1.32 percent. -
Persian Gulf LineThe freight rate per case is $2193, down $80 a week,by 3.52 per cent; -
South American Line(Santos) The freight rate per case is $8212, down $548 a week,by 6.26 per cent;
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