U.S. East and West freight rates fell for four consecutive weeks
Freight rates continue to fall across all routes, falling for four consecutive weeks! Mae West down! The United States East, Europe route decline expanded! What is the actual freight rate in the market at present? Some insiders said that after mid-August, the shipping company is considering raising the freight rate!!
At present, the global maritime market is undergoing a series of significant changes, mainly reflected in the fluctuation of freight rates, excess capacity and the adjustment of market competition pattern.
The continuous decline of the latest Shanghai export container Freight Index (SCFI) has become the focus of market attention. The SCFI data released on August 2 showed that the index fell 115.2 points to 3332.67 points, a weekly decline of 3.34%, and has fallen for four consecutive weeks. The decline of the United States and the West remained at 6% for three consecutive weeks, and the decline of the Mediterranean, the United States and the European routes expanded, respectively, to 5.18%, 2.21% and 1.68%.
In the past month, the SCFI has fallen by more than 400 points, or 10.74%. Frankly speaking, the speed and amplitude of the decline in freight rates reflect the intensity of competition in the maritime market. However, with the current market share of alliance shipping companies in the east-west route and the high degree of customer mastery, the current freight rate decline is still quite profitable for shipping companies.
Specifically, the US-West route has become the focus of many shipping companies because of the high turnover rate of ships and the need to circumnavigate. Not only alliance shipping companies continue to invest in new capacity through overtime ships or new routes, non-alliance shipping companies have also joined the war, resulting in fierce competition in freight rates, some non-alliance shipping companies even reduced freight rates to the level of 4 words per large box (40 feet container), forcing shipping companies to prevent cargo fine-adjustment response, further shrinking profit margins.
At the same time, the European and Mediterranean lines have not been immune to the wave of falling freight rates. Alliance shipping companies have also increased capacity investment in the form of overtime vessels or new routes, while non-alliance shipping companies have continued to enter the Mediterranean Line, adding to the downward pressure on freight rates. Since August, Mediterranean shipping and other companies will be overtime ships or new routes into the United States East line, the impact on freight rates quickly emerged.
Another major challenge facing the maritime industry is the potential for overcapacity in the second half of the year. According to Alphaliner, global capacity has reached a record high of 30,385,045TEU. Although the freight rate has been loosened, the shipping company still maintains a considerable profit level compared with the sharp increase in the previous period.
Current market rate situation
On Thursday (July 25), British shipping consultancy Drewry noted that rates in the container shipping market have peaked. The market reacted quickly, at noon on August 1, a large freight forwarder said that the latest freight rate of the United States West route was reduced by $200 per large box (40 feet container), and the United States East line was reduced by $300. However, in the evening, we received a notice from the shipping company to adjust the price reduction to $500 per large box.
Behind this adjustment is a fierce game of market forces. According to the analysis of freight forwarders, since July, non-alliance container ship companies have returned to the West American market and launched highly competitive freight rates as low as $4,800 per large box, more than $1,400 lower than the freight rates of alliance members. Although the original plan was to fine-tune the freight rates of alliance vessels by only $200 to $300, under the influence of market pressure and the low price strategy of non-alliance shipping companies, they eventually had to increase the price reduction rate in response to market changes.
In addition, there is also a phenomenon of matching prices in the market, that is, freight forwarders provide lower freight rates through specific matching methods. Specifically, for each of the five large boxes, one is charged at a long price of about $3,500 (including peak season surcharges), and the other four are charged at a spot price of $6,200, with an average cost of $5,660 per large box, and the freight forwarder charges $200-300 on this basis.
Shipping companies raise freight rates after mid-August?
Some industry insiders pointed out that the container shipping market rates may continue to decline next week, and the main reason for the relatively stable prices of the eastern United States and European routes is that the ship delays caused by bad weather in the Cape of Good Hope region. At the same time, due to the expected increase in orders for the festive season, shipping companies are expected to consider raising freight rates after mid-August.
The reasons for the current decline in freight rates are mainly attributed to three points: first, after the sharp rise in freight rates for 13 consecutive weeks, the market needs to revise back to cope with changes in demand; Second, the small ship companies on the US-West route seize market share through low price strategy; Third, demand in Asia failed to increase significantly in July, partly due to the advance effect caused by concentrated customer shipments in June, which made freight rates continue to decline.
However, well-known people in the logistics industry said that market demand is expected to pick up in August, and the receiving price from the Far East to Europe and the United States East is better than the spot price, showing that the market supply and demand relationship is still tight. Recently, the export volume has been observed to continue to increase, and many shipping companies plan to add GRI (comprehensive rate increase surcharge) and peak season surcharge in August, and the increase rate is between 1,000 and 2,000 US dollars per FEU (40 feet container). The continued increase in these additional costs is further evidence of the imbalance between supply and demand in the market.
The shipping industry generally believes that the current global container transport has entered the traditional peak season, but the market is still facing the problem of lack of containers and lack of ships. From the slight correction of freight rates in the United States and Europe, it can be seen that the contradiction between supply and demand still exists. The high freight rates from the Far East to the West of the United States have attracted offshore line operators to enter small boats to compete, which has further exacerbated the downward trend in the West of the United States.
At present, the global shipping market is in a dynamic adjustment process, freight fluctuations, excess capacity and changes in the competitive landscape are constantly shaping the future direction of the market.
SCFI Freight Index for this week, August 2:
Far East to Europe at $4,907, down $84, or 1.68%;
Far East to Mediterranean freight was $4,997 /TEU, down $273 or 5.18% from the previous week.
The Far East to West America freight rate was $6,245 /FEU, down $418 or 6.27% from the previous week;
The freight rate from the Far East to the Eastern United States was $9,346 /FEU, down $211, or 2.21%, from the previous week;
Persian Gulf route freight rate of 2,217 US dollars per box, down 2 US dollars, slightly down 0.1%;
South American route (Santos) freight per box 7867 US dollars, down 72 US dollars, a small decline of 0.9%;
At present, the global maritime market is undergoing a series of significant changes, mainly reflected in the fluctuation of freight rates, excess capacity and the adjustment of market competition pattern.
The continuous decline of the latest Shanghai export container Freight Index (SCFI) has become the focus of market attention. The SCFI data released on August 2 showed that the index fell 115.2 points to 3332.67 points, a weekly decline of 3.34%, and has fallen for four consecutive weeks. The decline of the United States and the West remained at 6% for three consecutive weeks, and the decline of the Mediterranean, the United States and the European routes expanded, respectively, to 5.18%, 2.21% and 1.68%.
In the past month, the SCFI has fallen by more than 400 points, or 10.74%. Frankly speaking, the speed and amplitude of the decline in freight rates reflect the intensity of competition in the maritime market. However, with the current market share of alliance shipping companies in the east-west route and the high degree of customer mastery, the current freight rate decline is still quite profitable for shipping companies.
Specifically, the US-West route has become the focus of many shipping companies because of the high turnover rate of ships and the need to circumnavigate. Not only alliance shipping companies continue to invest in new capacity through overtime ships or new routes, non-alliance shipping companies have also joined the war, resulting in fierce competition in freight rates, some non-alliance shipping companies even reduced freight rates to the level of 4 words per large box (40 feet container), forcing shipping companies to prevent cargo fine-adjustment response, further shrinking profit margins.
At the same time, the European and Mediterranean lines have not been immune to the wave of falling freight rates. Alliance shipping companies have also increased capacity investment in the form of overtime vessels or new routes, while non-alliance shipping companies have continued to enter the Mediterranean Line, adding to the downward pressure on freight rates. Since August, Mediterranean shipping and other companies will be overtime ships or new routes into the United States East line, the impact on freight rates quickly emerged.
Another major challenge facing the maritime industry is the potential for overcapacity in the second half of the year. According to Alphaliner, global capacity has reached a record high of 30,385,045TEU. Although the freight rate has been loosened, the shipping company still maintains a considerable profit level compared with the sharp increase in the previous period.
Current market rate situation
On Thursday (July 25), British shipping consultancy Drewry noted that rates in the container shipping market have peaked. The market reacted quickly, at noon on August 1, a large freight forwarder said that the latest freight rate of the United States West route was reduced by $200 per large box (40 feet container), and the United States East line was reduced by $300. However, in the evening, we received a notice from the shipping company to adjust the price reduction to $500 per large box.
Behind this adjustment is a fierce game of market forces. According to the analysis of freight forwarders, since July, non-alliance container ship companies have returned to the West American market and launched highly competitive freight rates as low as $4,800 per large box, more than $1,400 lower than the freight rates of alliance members. Although the original plan was to fine-tune the freight rates of alliance vessels by only $200 to $300, under the influence of market pressure and the low price strategy of non-alliance shipping companies, they eventually had to increase the price reduction rate in response to market changes.
In addition, there is also a phenomenon of matching prices in the market, that is, freight forwarders provide lower freight rates through specific matching methods. Specifically, for each of the five large boxes, one is charged at a long price of about $3,500 (including peak season surcharges), and the other four are charged at a spot price of $6,200, with an average cost of $5,660 per large box, and the freight forwarder charges $200-300 on this basis.
Shipping companies raise freight rates after mid-August?
Some industry insiders pointed out that the container shipping market rates may continue to decline next week, and the main reason for the relatively stable prices of the eastern United States and European routes is that the ship delays caused by bad weather in the Cape of Good Hope region. At the same time, due to the expected increase in orders for the festive season, shipping companies are expected to consider raising freight rates after mid-August.
The reasons for the current decline in freight rates are mainly attributed to three points: first, after the sharp rise in freight rates for 13 consecutive weeks, the market needs to revise back to cope with changes in demand; Second, the small ship companies on the US-West route seize market share through low price strategy; Third, demand in Asia failed to increase significantly in July, partly due to the advance effect caused by concentrated customer shipments in June, which made freight rates continue to decline.
However, well-known people in the logistics industry said that market demand is expected to pick up in August, and the receiving price from the Far East to Europe and the United States East is better than the spot price, showing that the market supply and demand relationship is still tight. Recently, the export volume has been observed to continue to increase, and many shipping companies plan to add GRI (comprehensive rate increase surcharge) and peak season surcharge in August, and the increase rate is between 1,000 and 2,000 US dollars per FEU (40 feet container). The continued increase in these additional costs is further evidence of the imbalance between supply and demand in the market.
The shipping industry generally believes that the current global container transport has entered the traditional peak season, but the market is still facing the problem of lack of containers and lack of ships. From the slight correction of freight rates in the United States and Europe, it can be seen that the contradiction between supply and demand still exists. The high freight rates from the Far East to the West of the United States have attracted offshore line operators to enter small boats to compete, which has further exacerbated the downward trend in the West of the United States.
At present, the global shipping market is in a dynamic adjustment process, freight fluctuations, excess capacity and changes in the competitive landscape are constantly shaping the future direction of the market.
SCFI Freight Index for this week, August 2:
Far East to Europe at $4,907, down $84, or 1.68%;
Far East to Mediterranean freight was $4,997 /TEU, down $273 or 5.18% from the previous week.
The Far East to West America freight rate was $6,245 /FEU, down $418 or 6.27% from the previous week;
The freight rate from the Far East to the Eastern United States was $9,346 /FEU, down $211, or 2.21%, from the previous week;
Persian Gulf route freight rate of 2,217 US dollars per box, down 2 US dollars, slightly down 0.1%;
South American route (Santos) freight per box 7867 US dollars, down 72 US dollars, a small decline of 0.9%;
