In the middle of July, the United States line increased by $2,000 per big box! The freight rate will break through the 10,000 yuan mark
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Although in the second half of June, there were 11 overtime ships on the American line, and COSCO Shipping and Singapore's SeaLead company launched new routes directly to the West of the United States, it did not change the plan to increase the price of each large box on the European and American routes scheduled to be implemented on the 15th.
Major freight forwarders have recently pointed out that the strike in the eastern United States may bring additional profit opportunities for shipping companies. Some shipping companies, such as HMM of South Korea and ONE of Japan, have proposed plans to raise the freight rate on the U.S. line to $2.000 per large box on July 15. In addition, from July 13. Evergreen Shipping will also adjust the peak season surcharge on the United States line, from the original 600 US dollars to 1.200 US dollars.
Last week, Delury predicted that freight rates outside China would continue to rise next week due to the arrival of the early season. The industry speculated that this may be related to the tariffs imposed by the United States on some goods from August 1. However, on Thursday evening, Delury revised his view, noting that freight rates from China would also continue to rise next week due to congestion at Asian ports.
Separately on Monday, the International Longshoremen's Association (ILA) announced that it has suspended negotiations with the United States Maritime Union (USMX) on a new labor contract for port workers on the U.S. East Coast and Gulf Coast. The reason for the suspension is that the implementation of automation at Maersk's dedicated terminals has an impact on workers' rights. The current labor agreement expires on September 30.
Peter Sand, principal analyst at Xeneta, noted that shippers have brought forward the loading of imports for the traditional peak season in the third quarter due to concerns about the ongoing impact of the Red Sea conflict on the supply chain. He further said that shippers may accelerate the practice if the eastern United States and Gulf Coast are at risk of major disruption later this year.
Although the industry generally believes that the government is unlikely to allow a strike in view of the upcoming U.S. presidential election, shippers are still taking necessary precautions, and early shipments are an immediate response strategy.
However, shipping executives believe that US President Joe Biden will try to broker a ceasefire between Israel and the Palestinians to bolster his electoral prospects. In this expectation, shippers may choose to delay shipments to avoid the current high rates. At the same time, due to the longer duration of the European route, the peak season starts earlier than the US line and may end earlier, the freight rate is expected to slow down in the third quarter and decline in the fourth quarter.
Regarding the current price trend of the shipping market, the heads of two large cargo companies hold different views. Company A believes that the price increase trend will continue in the third quarter, and the difficulty of the Israeli-Palestinian ceasefire is higher, and it remains to be seen whether the one-time price increase of $2.000. Company B holds a different view, believing that the US tariffs will lead to a reduction in the volume of goods in the market, thereby reducing the rate increase. At the same time, it noted the continuous emergence of overtime ships and new routes, such as the world's top two shipping companies Mediterranean Shipping and Maersk's 2M alliance announced on July 7 to open a new US-West route, calling Yantian, Ningbo, Shanghai and the port of Long Beach in the United States. In addition, small and medium-sized carriers that joined the US-West route during the pandemic are also planning to re-enter the market, and a large amount of new capacity could shake up rates.
However, the two companies agree on one thing: rates will fall in the fourth quarter. Company A expects rates to start falling in November, while Company B expects rates to start falling in October. Although both companies expect rates to fall quickly in the fourth quarter, they also acknowledge that shipping companies have made substantial profits in the first three quarters.
The shipping company plans to carry out a wave of price increases on the 15th, which is expected to rise to $7.100-7.400 in the West, $8.300-8.400 in the East, and $7.400-7.500 in the European line. In addition, there are plans to raise Europe and the United States by another $1.000 per large box on July 1. However, it is still impossible to predict whether the increase will be doubled to $2.000 on July 15. If it really rises above $2.000. then the freight rate will break the 10.000 mark.
Large freight forwarders point out that the current high freight rates have had an impact on shipments to the Middle East and Africa routes. As low-value products can not afford the high freight, so the freight rate of these routes has fallen.
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