Shipping companies are reducing sailings to control capacity and strongly pushing up freight rates on US routes. The Shanghai Containerized Freight Index (SCFI) has ended its 11 consecutive weeks of decline.
According to the latest data released by the Shanghai Shipping Exchange on August 29, the SCFI index rose by 29.7 points last week to 1445.06 points, a weekly increase of 2.09%, ending the 11-week downward trend. Among the four major ocean routes, US routes stopped falling and rebounded, while European and Mediterranean routes continued to decline.
Last week, the freight rate from the Far East to the US West Coast rose by $279 per FEU to $1923, a weekly increase of 16.97%; the freight rate from the Far East to the US East Coast rose by $253 per FEU to $2866, a weekly increase of 9.68%; the freight rate from the Far East to Europe fell by $187 per TEU to $1481, a weekly decrease of 11.21%; the freight rate from the Far East to the Mediterranean fell by $80 per TEU compared to the previous week to $2145, a weekly decrease of 3.59%.
On near-sea routes, the freight rate from the Far East to Japan’s Kansai remained unchanged from the previous week at $314 per TEU; the rate to Japan’s Kanto remained unchanged at $323 per TEU; the rate to Southeast Asia increased by $21 per TEU to $419; and the rate to Korea remained unchanged at $139 per TEU.
During the traditional peak season of the third quarter this year, the container shipping market did not see a peak season boom, with freight rates falling for 11 consecutive weeks. As major global shipping companies began to reduce sailings, market freight rates finally stabilized last week. The market is currently watching to see if the peak season effect will emerge in September. It is expected that freight rates will enter a stable period, awaiting the year-end Christmas and New Year shipment rush from Europe and the US.
Industry insiders said that they have recently received freight rate increase notices from several shipping companies effective September 1, with FEU rates proposed to increase by about $750 in the first half of the month. Last week’s SCFI increase may partially reflect this proposed hike atmosphere. Currently, US route cargo volumes are average. Shipping companies are supporting freight rates through measures like withdrawing ships and reducing sailings. The load factor for some voyages has recovered to about 90%, but discounted voyages on the US East Coast are still causing interference. Therefore, whether the proposed rate increase for the first half of September will be successful and the extent of the increase will become clearer this week.
Shipping companies chose to push for rate increases in September mainly considering that various countries’ tariffs on the US have been finalized, and US importers will gradually restock. Shipments for Christmas and the New Year will also begin. Additionally, with China’s National Day holiday approaching, manufacturers might ship early, which could generate more cargo volume to support freight rates. However, an unknown factor is the impact of tariff-induced inflation on purchasing power, which could suppress cargo volume and affect freight rate trends.
Currently, the spot rate for the US West Coast offered by shipping companies is around $1550 to $1600. If the increase is successful, it could potentially return to the $2000 mark, possibly reaching $2400. The spot rate for the US East Coast is around $2350 to $2400, with discounted voyages around $2300. If the increase is successful, it could return to the $3000 mark, possibly reaching $3400. As for European routes, due to many extra loader vessels, European shipping companies like Mediterranean Shipping Company (MSC) and Maersk have taken the lead in announcing that their early September quotes will maintain August levels. The current rate is around $2000 to $2300 per FEU.
