Understanding the Recent Fluctuations in Ocean Freight Rates

Recent Trends in Freight Rates

The Shanghai Maritime Exchange released new data on July 5th, indicating that the Shanghai Export Container Freight Index (SCFI) increased by 19.48 points to 3733.8 points last week, marking the highest point since late August 2022. This rise represents the thirteenth consecutive week of growth, albeit at a slower rate—from a 6.86% increase the previous week to 0.52% this week.

Regional Rate Changes

1. United States:

   • West Coast: The freight rate per FEU to the US West Coast increased by $273 to $8103, a 3.49% week-over-week rise.
   • East Coast: The rate per FEU to the US East Coast saw a more significant increase of $671, reaching $9945, up 7.24%.
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2. Europe and Mediterranean:

   • Europe: Freight rates per TEU to Europe saw a slight decrease of $23 to $485, down 0.47%.
   • Mediterranean: The rate per TEU to the Mediterranean increased by $45 to $5432, up 0.84%.
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3. Short-Sea Routes:

   • Japan: Freight rates per TEU to both Kansai and Kanto regions remained stable at $293 and $299, respectively.
   • Southeast Asia: The rate per TEU decreased by $13 to $730.
   • South Korea: A minor decrease of $6 brought the rate per TEU to $166.
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Factors Influencing Freight Rates

Industry analysts point to several factors influencing these trends:

• Capacity and New Vessels: With new vessels entering service and shipping companies increasing sailings, the rise in freight rates has been steady but slowing.
• Rate Adjustments: Recent adjustments, including the cancellation of a $1000 increase on US West and East lines scheduled for July 15th, reflect a softening trend.
• Route Changes: The resumption of the MUSTANG route from Asia to the US West by Mediterranean Shipping and the introduction of seven mid-sized container ships on the Asia-North Europe route by CMA CGM, along with promotional rates for major European customers, are likely to impact the momentum of freight rate increases.
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Future Outlook

Several factors will shape the future trends in freight rates:

• Capacity Constraints: Current constraints continue to drive rising freight rates.
• Red Sea Crisis: Ongoing issues may result in container ships being unable to return to ports on time, leading to a reduction in sailings. This scenario benefits industries such as furniture, home appliances, and plastics, which are replenishing inventory in European and American markets.

This analysis is based on the latest report from the Shanghai Maritime Exchange.