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The U.S. line rose by another $2,000! In mid-July, the freight rate will break through the 10,000 yuan mark

2024-06-24 09:55

Although in the second half of June, there were 11 overtime flights on the US line, and COSCO Shipping and Singapore's SeaLead have launched new routes to the west of the United States, but this has not changed the plan of $1,000 per large container price increase for the European and American routes, which was originally scheduled to be implemented on the 15th.
      Large cargo pickers have recently pointed out that the strike in the eastern United States may bring additional profit opportunities to shipping companies. Some shipping companies, such as South Korea's HMM and Japan's ONE, have proposed plans to raise the U.S. freight rate to $2,000 per large container on July 15. In addition, Evergreen Shipping will also adjust the peak season surcharge for the U.S. line from July 13, from the original $600 to $1,200.

Last week, Drury expected freight rates to continue to rise next week except China due to the arrival of the early part of the peak season. The industry speculates that this may be related to the fact that the United States has imposed tariffs on some goods since August 1. However, on Thursday (13th) night, Drury revised its view, 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 that it had suspended negotiations with the U.S. Maritime Union (USMX) on new labor contracts for port workers on the East Coast and Gulf Coast of the United States. The suspension is due to the impact on workers' rights caused by the automation of Maersk's dedicated terminals. At present, the existing employment contract agreement will expire on September 30.

Peter Sand, chief analyst at Xeneta, noted that shippers have advanced imports to prepare for the traditional peak season in Q3 due to concerns about the ongoing impact of the Red Sea conflict on supply chains. He further said shippers could expedite the practice if the eastern U.S. and Gulf coasts face significant risk of disruption later this year.

While there is a general consensus in the industry that the government is unlikely to allow a strike in the run-up to the U.S. presidential election, shippers are still taking the necessary precautions, with early shipments being an immediate response.

However, some shipping company executives believe that US President Joe Biden will work to broker a Palestinian-Israeli ceasefire to support his election prospects. In anticipation, shippers may choose to delay shipments to avoid the current high freight rates. At the same time, due to the longer voyages on the European route, the peak season starts earlier than the US route and may end earlier, and the rate increase is expected to slow in the third quarter and decline in the fourth quarter.

Regarding the current trend of price increases in the shipping market, the heads of the two super-large cargo collection companies have different views. Company A believes that the trend of price increases will continue in the third quarter, while the Palestinian-Israeli ceasefire is more difficult, and it remains to be seen whether it can raise prices by $2,000 at once. Company B has a different view, believing that the U.S. tariffs will lead to a reduction in market volume, thereby narrowing the increase in freight rates. At the same time, it is noted that overtime ships and new routes continue to emerge, such as the 2M alliance of the world's two largest shipping companies, Mediterranean Shipping Line and Maersk, announced the opening of a new US-West route on July 7, calling at Yantian, Ningbo, Shanghai and the port of Long Beach in the United States. In addition, small and medium-sized carriers that joined the USWC route during the epidemic also plan to re-enter the market, and a large amount of new capacity may shake freight rates.

However, the two companies agree on one thing: freight rates will fall in the fourth quarter. Company A expects freight rates to start falling in November, while Company B expects them to start falling in October. While both companies expect rates to decline quickly in the fourth quarter, they also admit that shipping companies have made significant profits in the first three quarters.

The shipping company plans to carry out a wave of price increases on the 15th, and it is expected that the freight rate will rise to $7100-7400 in the US West, $8300-8400 in the US East, and $7400-7500 in the European line. In addition, there are plans to increase the price by another $1,000 per large box on July 1 against Europe and the United States. However, it is still impossible to predict whether the increase will be doubled to $2,000 on July 15. If it really rises above 2,000 US dollars, then the freight rate will break through the 10,000 yuan mark.

Large cargo pickers point out that the current high freight rates have already had an impact on shipments from the Middle East and Africa routes. As low-value products struggle to afford high freight rates, rates on these routes have fallen.

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