Freight Rates On The US Routes Have Plunged! Decline Across All Shipping Routes...

On the 23rd, the Shanghai Containerized Freight Index (SCFI) showed a decline once again. Freight rates on the four major routes to Europe and the United States all slid. The decline on the US routes intensified, mainly due to weakened demand and the continuous increase in new shipping capacity.

The Shanghai Containerized Freight Index (SCFI) has recently shown a decline once again. The latest data on the 23rd shows that this index reversed the slight increase of last week and fell by 5.6% to 3097.63 points.

This change marks the end of the five consecutive weeks of decline (a slight increase of 0.84% last week) being broken again. Freight rates on the four major routes to Europe and the United States all declined. Specifically, the freight rates on the routes to the west and east of the United States dropped significantly by 9.51% and 8.08% respectively, while the routes to Europe and the Mediterranean also fell by 4.56% and 2.63% respectively.

The industry generally believes that the continuous influx of new shipping capacity in the form of extra voyages and new shipping routes has intensified market competition and become the main factor suppressing freight rates. Executives of large freight forwarding companies predict that unless a strike really occurs on the east coast of the United States, freight rates will likely continue to decline week by week.

Senior executives of large freight forwarding companies recently pointed out that due to the oversupply of ships in central China, the current market freight rate has fallen to a low of $4600 to $4800 last week. While in southern China, thanks to the support of e-commerce goods, the freight rate is still maintained at around $6000.

The freight rate on the European route has also significantly declined and is currently hovering between $6500 and $7500. The overall freight rate market shows a chaotic and continuous downward trend.

According to industry experts' analysis, the current market freight rate is extremely flexible and immediate. Once the cargo receipt situation is not good, shipping companies will quickly adjust the freight rate. The traditional 1:4 ratio mode between long-term contract prices and spot prices has been broken, and now a 1:1 pricing method is mostly adopted, resulting in a significant drop in the actual charging level.

With the continuous delivery and use of newly built ships, the market freight rate is described as "there is no lowest, only lower", and it continues to adjust downward. Some flights even offer special prices to attract cargo volume, but even so, the flight loading rate is only maintained between 80% and 90%.

It is worth noting that compared with before the epidemic, although the loading rate is similar, the current freight rate is still nearly twice as high as the cost price. Shipping companies are maintaining high freight rates through adjusting shipping space and constantly trying price increase strategies.

Judging from the current supply and demand situation in the shipping market, oversupply has led to price chaos. Industry insiders bluntly said that the brief rebound of the SCFI last week was actually a misunderstanding. The newly released index has fallen again, especially the decline on the route to the west of the United States exceeded 9%, and the route to the east of the United States also fell by 8%.

The market generally believes that freight rates may continue to decline in the coming weeks, and the strike risk of dockworkers on the east coast of the United States remains an important variable to observe.

Freight forwarders analyzed that due to multiple factors such as insufficient cargo volume, the continuous entry of new ships into the market, and the market gradually entering the off-season, the overall trend of freight rates is bearish.

In particular, this year, due to shippers' concerns about US tariffs and the possibility of strikes on the east coast of the United States, they have shipped goods in advance, which may lead to an even colder off-season in the fourth quarter.