Freight rates have risen for the sixth consecutive time, and the four major European and American routes continue to surge. July may reach the current market high point

With the traditional peak season starting in advance, the U.S. tariff policy window approaching, and the global supply chain continuing to be under pressure, the international container shipping market has ushered in a new round of rising prices. The latest Shanghai Export Container Freight Index (SCFI) data shows that the index has strengthened for the sixth consecutive week. Freight rates on the four major European and American trunk routes have increased across the board. Among them, the US-Western route has a weekly increase of nearly 10%, becoming one of the markets with the strongest momentum in this round of rise.

It is generally judged in the industry that due to the combination of multiple factors including the concentrated release of cargo volume, continued tightening of shipping capacity by shipping companies, increasing port congestion, and unresolved geopolitical risks, the upward trend in freight rates will be difficult to reverse in the short term, and the market is expected to reach a phased high in this upward cycle in July.

According to data released by the Shanghai Shipping Exchange on June 5, the SCFI composite index reported 2726.48 points, an increase of 154.75 points from the previous week, with a weekly increase of 6.02%, achieving the sixth consecutive week of gains. Freight rates on the four major ocean routes have increased across the board:

• Far East to West America route: 40-foot container freight rate increased by US3 to US,552/FEU, a weekly increase of 9.71%;

• Far East to US East route: 40-foot container freight rate increased by US8 to US,741/FEU, a weekly increase of 7.65%;

• Far East to Europe route: 20-foot container freight rate increased by US0 to US,605/TEU, a weekly increase of 5.3%;

• Far East to Mediterranean route: The freight rate for 20-foot containers increased by US to US,832/TEU, a weekly increase of 2.2%.

Since the changes in the situation in the Middle East, the cumulative increase in the SCFI Composite Index has nearly doubled, and the overall market enthusiasm continues to heat up.

The core driving force for this round of freight rate increases comes from the concentrated release of market demand in North America. The 10% temporary import tariff policy previously implemented by the United States will expire on July 24. In order to avoid potential trade cost risks, a large number of Asian exporters have arranged shipments in advance, driving the rapid increase in cargo volume on the trans-Pacific route. At the same time, adjustments to some trade policies have also led to the recovery of U.S. import demand, further stimulating shipping demand.

While demand has increased significantly, shipping companies have continued to implement capacity control strategies, using measures such as empty flights, cabin control, and restriction of low-price cabins to maintain tight market capacity, especially on the US East route. At present, many major port routes have experienced the situation of "it is difficult to find a cabin", and the phenomenon of container dumping and rolling cabin occurs frequently. Large freight forwarding companies have reported that most shipping lines on the U.S. line are nearly full, and shipping companies are continuing to push up market prices through peak season surcharges (PSS) and comprehensive rate surcharges (GRI).

It is understood that many shipping companies have notified customers to further increase freight rates starting from June 15: the US West route will charge an additional PSS of approximately US,500, and the actual market freight rate is expected to increase to approximately US,350/40-foot container; the US East route will charge an additional PSS of approximately US,500. The route will charge an additional PSS of approximately US,300, and the actual freight rate will rise to approximately US,600/40-foot container; the US Gulf route will charge an additional PSS of approximately US,250, and the freight rate will reach approximately US,700/40-foot container. In addition, Mediterranean Shipping Company (MSC) has previously raised its offer in the West American market to US,700, and plans to further increase it to US,000 in mid-June.

Driven by GRI and PSS policies, freight rates on European routes continue to rise. At present, FAK quotations at European basic ports generally remain in the range of 3900 to 4350 US dollars/40HC. With the implementation of a new round of GRI in late June, the market expects quotations to further rise to 4,700 to 6,000 US dollars/40HC. The rise in the Mediterranean market is more obvious. The current quotation of FAK in the Mediterranean port is about 4500 to 5500 US dollars/40HC, and there is a chance that it will rise to 6000 to 6500 US dollars/40HC in the future.

The imbalance between supply and demand is an important reason for the rise in the European market. Data shows that the current overall demand in the European market has reached 2 to 3 times the effective capacity. Due to a large number of empty sailings in May, shipping companies have accumulated a large-scale rolling cargo volume. After entering June, the market shortage of space is still serious, and the space shortage in some alliances is particularly prominent. At the same time, congestion problems at major European ports persist: the average waiting time at Nordic ports remains at 1.5 to 2 days; the utilization rates of Mediterranean ports such as Greece, Spain and Italy remain high, which has a continued impact on the stability of shipping schedules.

In addition to the European and American markets, demand for routes in the Middle East and Latin America also maintains strong growth. Driven by the adjustment of Brazil's tariff policy, the arrival of the traditional peak season, and the concentrated export of machinery and equipment, auto parts, new energy products, and photovoltaic equipment, there is a clear rush for space in the Latin American market. At present, freight rates on routes to the east of South America, west of South America and Mexico have increased across the board, and many shipping companies have fully loaded their shipping spaces until early July. At the same time, the supply of 40-foot general containers continues to be tight, and some shipping companies have begun to strictly implement heavy cargo restrictions and overweight surcharge policies. At major ports such as the Port of Santos in Brazil, the arrival rhythm is disrupted due to the diversion of global ships, and a large number of ships arrive at the port, further exacerbating terminal congestion pressure.

The current Red Sea crisis has not yet been completely alleviated, and the risk of potential blockade in the Strait of Hormuz still exists. A large number of ships continue to bypass the Cape of Good Hope route, which lengthens the transportation cycle and reduces the efficiency of transportation capacity turnover. At the same time, international fuel prices remain high, further pushing up the operating costs of shipping companies.

Industry insiders pointed out that for goods worth tens of thousands of dollars or more, the cost of potential tariff increases is much higher than the increase in sea freight, so cargo owners are more inclined to ship goods in advance. This "rush for shipments" is continuing to amplify market demand and further strengthen the momentum for rising freight rates.

Taken together, multiple factors such as demand growth, tight shipping capacity, port congestion, equipment shortages, and geopolitical risks are still supporting rising freight rates. With the new round of PSS and GRI being implemented in mid-June, and the traditional peak season in full swing, the global container shipping market is expected to maintain high levels, and July may become an important high point in this round of freight rate increase cycles.