Could freight rates fall further in 2025?
Container futures trading in Shanghai suggests that freight rates between Asia and Europe could fall further in 2025 after appearing to have peaked for now.
On August 5, the EC2408 index (August contract) closed at 5,627 points, while the EC2410 index (October contract) closed at 3,585 points, down 3% and 9% respectively from July 29. EC2504(April 2025 contract) stood at 1,961 points and EC2506(June 2025 contract) at 1,955 points, down 5% and 6% respectively from July 29.
On August 2, the Shanghai Container Freight Index (SCFI) showed that freight rates between Shanghai and Northern Europe slipped 2% from the previous week to $4,907 /TEU, although this is much higher than the $947 /TEU a year ago.
Linerlytica's report today (Aug. 6) noted that near-term contracts led the decline for most of last week before long-term contracts were affected by U.S. recession fears.
Container freight index Futures began trading in August last year through the Shanghai International Energy Exchange, a unit of the Shanghai Futures Exchange. The paper trade is carried out by shippers, freight forwarders and liner operators.
Volume is shifting from the EC2410 contract to the later contract, with the EC2504 contract gaining the most market interest.
"Based on the latest closing prices of EC2408 and EC2410, the futures market is down 4.46 percent per week over the next three weeks to the end of August and 4.49 percent per week over the next nine weeks to the end of October," Linerlytica said. Rates are expected to continue to decline through 2025, with the current EC2506 rates at a 68% discount to the SCFIS(Shanghai Container Freight Index based on settlement rates). Although rates have held up much better than Asia-US West Coast and Asia-Mediterranean rates, sentiment has turned negative and airline quotes are starting to come down, which is a further indication that rates have peaked."
Linerlytica believes that while cargo futures continue to weaken, airlines remain in a strong position as overall capacity to northern Europe remains limited and despite recent additions, the 13-week moving average is still down 3.4% compared to last year.
Actual flights from Asia remain erratic as port congestion and weather delays cause capacity to slump.
On August 5, the EC2408 index (August contract) closed at 5,627 points, while the EC2410 index (October contract) closed at 3,585 points, down 3% and 9% respectively from July 29. EC2504(April 2025 contract) stood at 1,961 points and EC2506(June 2025 contract) at 1,955 points, down 5% and 6% respectively from July 29.
On August 2, the Shanghai Container Freight Index (SCFI) showed that freight rates between Shanghai and Northern Europe slipped 2% from the previous week to $4,907 /TEU, although this is much higher than the $947 /TEU a year ago.
Linerlytica's report today (Aug. 6) noted that near-term contracts led the decline for most of last week before long-term contracts were affected by U.S. recession fears.
Container freight index Futures began trading in August last year through the Shanghai International Energy Exchange, a unit of the Shanghai Futures Exchange. The paper trade is carried out by shippers, freight forwarders and liner operators.
Volume is shifting from the EC2410 contract to the later contract, with the EC2504 contract gaining the most market interest.
"Based on the latest closing prices of EC2408 and EC2410, the futures market is down 4.46 percent per week over the next three weeks to the end of August and 4.49 percent per week over the next nine weeks to the end of October," Linerlytica said. Rates are expected to continue to decline through 2025, with the current EC2506 rates at a 68% discount to the SCFIS(Shanghai Container Freight Index based on settlement rates). Although rates have held up much better than Asia-US West Coast and Asia-Mediterranean rates, sentiment has turned negative and airline quotes are starting to come down, which is a further indication that rates have peaked."
Linerlytica believes that while cargo futures continue to weaken, airlines remain in a strong position as overall capacity to northern Europe remains limited and despite recent additions, the 13-week moving average is still down 3.4% compared to last year.
Actual flights from Asia remain erratic as port congestion and weather delays cause capacity to slump.
