The Persian Gulf rose sharply against the trend, while the United States, West America, and Eastern Europe fell. Freight rates fell for three consecutive weeks.
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After several months of rush to ship goods, the container shipping market is entering a phased adjustment channel. On July 24, the Shanghai Export Container Freight Index (SCFI) closed at 3062.95 points, down 17.36 points or 0.56% from the previous period, marking the third consecutive week of decline. However, compared with the 4.27% and 3.28% declines in the previous two weeks, this week's decline has narrowed significantly, indicating that the market is gradually turning to stabilization from the previous rapid cooling.
Industry analysts believe that from May to June this year, driven by expectations of adjustments to U.S. tariff policies and advance stocking by European and American importers, there was a concentrated rush for shipments on the trans-Pacific route, driving freight rates to rise continuously. After entering July, the demand for concentrated shipments was gradually released, and shipping companies continued to invest in new shipping capacity and overtime ships. The market supply of space significantly improved, and freight rates entered a correction cycle.
Performance differentiation of major routes
The US-West route continues to be under pressure. The freight rate from the Far East to the US-West this week was reported at US,535/FEU, down US6 or 3.25% from last week. Although the decline has narrowed compared with before, it has fallen for several consecutive weeks, mainly due to the continued introduction of new capacity and the slowdown in booking demand.
The US East route ended its previous relatively strong trend, and the freight rate this week was reported at US,040/FEU, a decrease of US2, or 1.62%. Previously, supported by factors such as the Panama Canal's draft restrictions and limited new shipping capacity, freight rates in the East US remained high. However, as overall demand cooled, prices began to loosen.
The European route continued its adjustment trend. The freight rate from the Far East to Europe was reported at US,155/TEU, down US, or 1.87%; the freight rate to the Mediterranean was reported at US,351/TEU, down by US4, or 2.77%. The decline in European routes was relatively mild, but market quotations continued to return to rationality, and price competition among shipping companies intensified.
The Persian Gulf route has become the highlight of this week. Affected by renewed tensions in the Middle East, some ships have diverted and regional shipping capacity has shrunk, pushing up freight rates. This week, the freight rate from the Far East to the Persian Gulf was reported at US,584/TEU, an increase of US8 from last week, an increase of 7.45%, making it the main route with the largest increase this week. Transportation uncertainty caused by regional security risks is the core driver of this round of gains.
In terms of other routes, the South America (Santos) route was reported at US,453/TEU, a decrease of US7, or 7.6%; the Australia and New Zealand route was reported at US,233/TEU, an increase of US, or 1.3%. Among the near-ocean lines, the Southeast Asia route reported 8/TEU, up 1.59%; Japan's Kansai line was unchanged at 9; the Kanto line rose 0.62% to 3; and the South Korea line rose 1.23% to 4.
U.S. thread market: The rush for shipments subsides and returns to the fundamentals of supply and demand
The new round of Section 301 tariff measures in the United States officially came into effect on July 24, Eastern Time, connecting with the previous temporary tariff policy. The industry believes that this move marks that the tariff measures in the U.S. trade policy are becoming more long-term. The previous concentrated rush to ship goods caused by the expectation of tariffs is difficult to reproduce. In the future, U.S. line freight rates will return more to the fundamentals of supply and demand, determined by changes in consumer demand and the capacity control capabilities of shipping companies.
There are market rumors that some shipping companies plan to increase comprehensive rates from August 1, but the industry believes that whether the price increase can be implemented depends on the ship loading situation in the last week of July. If the loading rate remains high, shipping companies may have some room to raise prices; on the contrary, it will be more difficult to implement price increases against the backdrop of a drop in cargo volume. After entering September, shipping companies are expected to flexibly adjust shipping capacity according to changes in U.S. consumer demand and avoid a sharp decline in freight rates by suspending sailings and controlling flights.
Freight forwarding market reference price
According to feedback from freight forwarding companies, competition in the US-Western route market has intensified. Some shipping companies have released shipping capacity through overtime shipping, and freight rates have become more loose. At the same time, many shipping companies have adjusted their internal price ratios for U.S. routes, with some ratios approaching the 1:1 level. The actual effect is equivalent to lowering quotations. However, please note that if you fail to lock the space in advance, you may only be able to accept the market spot price (FAK) in the future.
Current market reference price:
US Southwest Route: 40-foot container is about US,500-5,800
US Northwest Route: About US,000 for a 40-foot container
US East Route: About US,000-8,900 for a 40-foot container
Outlook for future trends
Industry analysts believe that this round of freight rate corrections mainly reflects the rebalancing of market supply and demand, rather than a significant shrinkage in demand. The demand for rush shipments caused by the expected tariffs has basically been released, and booking enthusiasm has declined; at the same time, the continued delivery of new ships, the increase in overtime shipping capacity, and the gradual recovery of some bypass shipping capacity have jointly promoted the continued improvement of market capacity supply.
However, there are still many uncertain factors in the market outlook: the evolution of the geopolitical situation in the Middle East, navigation restrictions on the Panama Canal, the traditional peak season stocking rhythm in Europe and the United States, and shipping company capacity management measures, etc., will all have an impact on freight price trends in the coming weeks.
It is worth noting that although SCFI has fallen for three consecutive weeks, the overall freight rate level is still significantly higher than the level at the beginning of the year. Market participants judge that the current adjustment is closer to a phased correction after a rapid rise in the early period, rather than the start of a new downward cycle. If demand remains stable during the peak season in the third quarter and shipping companies continue to control their shipping capacity, freight rates are still expected to be supported at relatively high levels.
