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Raise the freight rate by $1000?! Shipping Company Announces Effective August 15
Aug 01,2024
Major airline operators plan to adjust freight rates from Asia to the U.S. West Coast in mid-August to respond to recent market volatility and seek to offset the impact of earlier adjustments. According to overseas media reports, since August 15, a number of shipping companies have announced that they will increase the freight rate per 40-foot container by US $1000, aiming to curb the continuous decline in freight rates on this route in the past three weeks.
Last Friday's Shanghai Container Export Freight Index showed that the freight rate from Shanghai to the West Coast of the United States fell significantly by about 7% from the previous week, reaching an average of US $6663 per 40 feet, although this level is still much higher than the US $1943 in the same period last year.
However, market analysis agency Linerlytica pointed out in its report on the 31st that carriers are facing severe challenges because the recent significant increase in capacity from Asia to the west coast of the United States and Mexico has broken the previous tight supply and demand balance. Even in the traditional freight season, the decline in capacity utilization is particularly prominent.
It is worth noting that in the third quarter, as the peak season for traditional freight, freight volume continued to grow strongly, but newly launched shipping services such as AWC service in SeaLead Shipping and various temporary USWC flights have increased the total capacity of the route by more than 15%.
Linerlytica estimates that the total number of ships currently sailing on the route reaches 306 with a carrying capacity of more than 2.58 million TEUs, an increase of 14% compared with the same period last year.
At the same time, freight rates from Asia to the east coast of the United States also showed a downward trend, down 2% from the previous week, with an average freight rate of $9557 per 40 feet, while the capacity of the route was basically the same as that of the same period last year, exceeding 2.75 million TEUs.
In contrast, freight rates on routes from Asia to Europe remained stable and almost unchanged, averaging $4991 per 40 feet. This stability is mainly due to the role of tight capacity in compensating for the reduction in freight traffic.
The Linerlytica pointed out that although the utilization rate of ships on the (Asia to Northern Europe) route has dropped from the peak in May to June, the market capacity is still tight. Bad weather conditions and port congestion have led to the gathering of ships on the Northern Europe and Mediterranean routes, and the quasi-shift rate has dropped significantly.
Some additional loading flights have also been canceled as a result. For example, the French Peak Service, which was originally scheduled to open in September, has been reduced from seven flights to four. This adjustment is aimed at responding to seasonal demand changes.
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