The shipping surge triggered by the mutual tariff reductions between China and the U.S. is pushing container freight rates to soar. The Shanghai Container Freight Index (SCFI) has risen for four consecutive weeks, reclaiming the 2,000-point mark.
According to the latest data released by the Shanghai Shipping Exchange on May 30, the SCFI index rose by 486.59 points to 2,072.71 points last week, a weekly increase of 30.68%, maintaining an upward trend for four consecutive weeks and returning to the level of mid-January this year. Freight rates on the four major ocean routes to Europe and the U.S. all increased significantly, each exceeding 10%.
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Last week, the freight rate from the Far East to the U.S. West Coast rose by $1,897 per FEU to $5,172, a weekly increase of 57.92%; the freight rate from the Far East to the U.S. East Coast rose by $1,959 per FEU to $6,243, a weekly increase of 45.8%; the freight rate from the Far East to Europe rose by $270 per TEU to $1,587, a weekly increase of 20.5%; the freight rate from the Far East to the Mediterranean rose by $733 per TEU to $3,061 compared with the previous week, a weekly increase of 31.49%.
On the short-sea routes, the freight rate from the Far East to Japan's Kansai remained flat at $315 per TEU compared with the previous week; the freight rate from the Far East to Japan's Kanto remained flat at $320 per TEU; the freight rate from the Far East to Southeast Asia rose by $1 to $441 per TEU; and the freight rate from the Far East to South Korea fell by $1 to $139 per TEU.
Industry insiders said that the uncertainty in the container shipping market remains high, so this round of shipping surge will continue. As U.S. companies need to replenish inventory and start preparing for year-end festivals such as Christmas after entering the traditional peak season in the third quarter, these demands will support freight rate trends.
The U.S. route opened at a new high in June, with tight space in the first week. On June 1, the freight rates per FEU for the U.S. West Coast and East Coast routes of shipping alliance member companies rose above the $6,000 and $7,000 marks respectively, doubling the increase. Some non-alliance shipping companies quoted about $5,600 for the U.S. West Coast route. The European route is expected to see freight rates rise to about $2,400-2,500 per FEU on June 1, an increase of nearly 50%.
The industry pointed out that there are still two variables affecting the U.S. route freight rate trend after the Dragon Boat Festival. First, the gradual deployment of extra vessels to grab cargo may curb the upward trend; second, with the rapid rise in freight rates, many cargo owners have begun to wait and see or slow down shipping, waiting for container shipping companies to restore space to pre-April levels by the end of June or the first week of July, at which point freight rates are expected to fall.
After China and the U.S. suspended reciprocal tariffs on the 12th, China restarted shipping, and U.S. route bookings surged, pushing freight rates up rapidly. Currently, market shipping capacity supply lags behind demand, and container shipping companies have successively redeployed vessels from Europe, Central and South America, or the Middle East to support the U.S. route, which takes time. There is an optimistic expectation that freight rates will remain strong, and routes such as Europe, Central and South America, and the Middle East are expected to see freight rate rebounds due to reduced capacity.
