Freight rates on the four major European and American routes continue to soar, with freight rates rising for the ninth consecutive year

On June 26, the Shanghai Export Container Freight Index (SCFI) reported 3239.64 points, an increase of 117.95 points, or 3.8%, from last week. It has increased for the ninth consecutive week, and the index has regained the 3200-point mark. Due to the intertwining of multiple factors including the release of stocking demand during the traditional peak seasons in Europe and the United States, the continued fermentation of geopolitical risks in the Middle East, and the uncertain prospects for the resumption of Red Sea routes, the supply and demand pattern of the container shipping market remains tight. Freight rates on major ocean routes continue to rise. The market is generally optimistic about the traditional peak season market in the third quarter.

The SCFI index continued its upward trend this week, and freight rates on major European and American routes rose across the board. Industry analysts pointed out that the current European and American markets have entered the traditional stocking cycle, and the demand for replenishment at consumption nodes such as the back-to-school season, Thanksgiving and Christmas is gradually being released, and the import resilience of the North American market is still strong. At the same time, the situation in the Middle East continues to be tense, the shipping safety situation in the Strait of Hormuz has not fundamentally improved, and the Red Sea route will still be difficult to resume normal navigation in the short term. A large number of ships are forced to continue to sail around the Cape of Good Hope, and effective shipping capacity continues to be occupied, providing support for freight rates to remain high.

In contrast to European and American routes, freight rates on Asian short-ocean routes have not changed much and remain stable overall.

In the face of continued strong market demand, many liner companies plan to implement a new round of comprehensive rate increase surcharges (GRI) from July 1, and the US route is planned to increase by approximately US,500 per FEU. According to the reference quotations currently published in the market, the US Southwest Route (PSW) is approximately US,600/FEU, the US Northwest Route (PNW) is approximately US,800/FEU, and the US East Route (EC) is approximately US,100/FEU.

It is generally judged in the industry that the price increases for the northwest and east routes of the United States are more likely to be implemented. However, the southwest route of the United States has relatively intensive overtime shipping capacity and the market competition is relatively fierce. There is still room for negotiation on the actual transaction price. The final increase depends on market acceptance. In terms of European routes, the new round of freight rate adjustments on July 1 has narrowed compared with previous rounds. The current reference quotation of some shipping companies is about US,500/FEU. Although freight rates remain high, the pace of increase has become moderate.

Many large freight forwarding companies said that the current spot freight rates on European and American routes have generally risen to 2 to 3 times the operating costs. Driven by high returns, it is expected that more overtime ships will be put into the market in the third quarter to meet peak season demand. At the same time, there is also a certain differentiation within the US routes: some liner companies quoted prices in July that were significantly higher than the spot market average, while other companies quoted prices that were relatively conservative.

CMA CGM has announced that it will impose a peak season surcharge (PSS) on goods exported from Asia, the Far East and the Indian subcontinent to the United States and Canada (excluding Honolulu and Dutch Port) from July 10. Among them, a 20-foot container will be charged an additional US,600, a 40-foot container will be charged an additional US,000, and a 45-foot high container will be charged an additional US,050. This move further releases a signal from shipping companies to maintain high freight rates.

The industry generally believes that in the third quarter, which is the traditional peak season for transportation in Europe and the United States, the export demand for AI servers, liquid cooling equipment and related electronic products continues to be strong, and will continue to provide cargo volume support for trans-Pacific routes. However, there is still great uncertainty in the subsequent market trend: on the one hand, the U.S. tariff policy adjustment window is approaching, and some traditional manufacturing companies have begun to slow down the pace of shipments; on the other hand, the pace of new shipping capacity, changes in Sino-U.S. trade policies, and the evolving geopolitical situation in the Middle East may all have an impact on freight rate trends in the third quarter.

Overall, the international container shipping market is expected to maintain a relatively high level in the third quarter due to the combined effects of multiple factors such as peak season stocking, continued detours, and tight space. However, whether freight rates can continue to rise rapidly still depends on the sustainability of the demand side and the evolution of global supply chain risks.