Cabins Running Out, Frequent Cancellations, and Rising Freight Rates! Global Shipping Peak Hits Early, Another Price Surge Expected in June

The global container shipping market is growing rapidly. With the traditional peak season in Europe and the United States starting early,Market demand continues to be released, and freight rates on the east-west trunk routes have increased across the board. "Cabin explosion", "cabin dumping", "lack of containers" and "cabin control" have become high-frequency words in the current industry.

At the same time,Shipping companies have intensively increased FAK, GRI and PSS surcharges, and maintained high freight rates through empty sailings, reduced cabins and other means.In addition, the situation in the Middle East continues to be tense, the prospect of passage through the Strait of Hormuz remains unclear, and fuel surcharges and operating costs are rising simultaneously, further pushing up risks and cost pressures in the global shipping market.

According to the latest World Container Shipping Price Index (WCI) released by Drewry, the composite index rose 6% this week to US,712/FEU, indicating that the global shipping market as a whole has entered an upward channel.

Among them, the Asia-Europe route is on the rise: the freight rate from Shanghai to Rotterdam increased by 15% to US,773/FEU, and the freight rate from Shanghai to Genoa increased by 10% to US,082/FEU. Drewry pointed out that with the early release of peak season cargo volume and shipping companies continuing to push up FAK rates, there is still room for further increases in freight rates in the coming weeks.

According to data from Drewry's "Container Capacity Insights", there are only three empty sailings on the Asia-Europe route next week, indicating that shipping companies are increasing their shipping capacity to handle peak season cargo volume, but the market's effective space is still tight.

In terms of trans-Pacific routes, freight rates also increased slightly this week: freight rates from Shanghai to New York increased by 2% to US,317/FEU, and from Shanghai to Los Angeles increased by 1% to US,385/FEU.

In terms of shipping companies, CMA CGM has announced the implementation of new FAK rates starting from June 1, with the Asia to Mediterranean route reaching US,500-5,700/FEU. Ocean Network Shipping (ONE) also announced an additional peak season surcharge (PSS) of US,000/FEU for trans-Pacific to eastbound cargo.

Overall, the global shipping peak season is significantly ahead of schedule this year, and shipping companies are maintaining the market at a high level through various methods such as price increases, cabin control, suspension of sailings, and capacity allocation.

The trans-Pacific route is now in full tension.The recent Shanghai Export Container Freight Index (SCFI) shows that the US East (USEC) and US West (USWC) routes have both increased by more than 14%, and the spot market freight rates have risen rapidly simultaneously.

As the peak season stocking in the North American market starts in advance, a large number of orders are shipped intensively, and upper shipping companies continue to control factors such as cabin price guarantees, empty flights and reduced cabins, and unstable equipment turnover. The US line has shown an obvious supply shortage in the market.

At present, most shipping companies have nearly full capacity, and "cabin bursting", "cabin dumping" and "it is hard to find a cabin" have become the market norm. Especially since late May, the shortage of cabin space has further intensified, and the overall pressure is expected to last throughout June.

At the same time, positive signals from the Sino-US economic and trade aspects have also boosted market confidence in shipments. The current trans-Pacific route has formed a tight balance of "high freight rates, high loading rates, and strict control over space release".

According to data from Drewry, there will be 7 empty sailings on the trans-Pacific route next week, further compressing the market's effective transport capacity and creating space for shipping companies to subsequently increase freight rates.

European routes have strengthened significantly driven by the recent comprehensive rate increase surcharge (GRI).Affected by the concentrated push by shipping companies in late May, the SCFI European Route Index rose significantly.

At present, FAK quotations at European basic ports remain generally in the range of 2800-3100 US dollars/40HC, and the market price remains high and stable.

In the third quarter of the traditional peak season, the loading rates of the four major shipping companies continue to be high, and most voyages are close to full capacity. At the same time, the cabin space on some alliance routes has become significantly tighter, and the market switch has seen cargo dumping and temporary cabin adjustments, which reflects the structural tightness of the feedback end.

Although the current overall empty order rate is still at a relatively controllable level, actual effective shipping capacity is still tight due to continued growth in market demand. In addition, the continued congestion problems in some European ports have also caused certain disturbances to the stability of shipping schedules.

In addition, many shipping companies have announced in advance a new round of GRI and PSS increase plans in June, and the market expects that freight rates on European routes will continue to rise further.

Mediterranean routes have seen stronger gains recently.Affected by the GRI increase in mid-May, the SCFI Mediterranean route index rose rapidly, and the market has entered a clear upward channel.

The current FAK quotation remains in the range of 3800-4500 US dollars/40HC, and the overall price is running at a high level. As demand continues to release and shipping companies are generally fully loaded, the market space shortage problem has further intensified.

In particular, some routes of the Ocean Alliance (OA) have cumulatively expanded the scale of roll-deck cargo volume and implemented significant space restrictions on low-priced cabins, further intensifying the tension on the replenishment side.

At the same time, shipping companies have announced a new round of price increases in June. The substantial accumulation of rolling pressure and peak season reports have further strengthened the market's expectations for subsequent price increases.

In terms of destination ports, there are still obvious congestions in ports such as Greece, Spain and Italy, and terminals continue to operate at high levels, which has a continued impact on the stability of the overall route.

Recently, the demand for routes in the Middle East, Red Sea and Indian subcontinent has picked up significantly, pushing the overall freight rate into an upward channel.

With the peak season, the space on relevant routes becomes tighter. Most voyages on the Red Sea route have been over-corrected in May, and some cargo volumes have continued to be postponed to June; after the Persian Gulf route has been on the sidelines in the mainland, demand has been rapidly replenished in the near future, and market space has been tightening simultaneously.

Secondly, the current shortage of shipping space on the east coast of India, especially in the direction of Bangladesh, is seriously acute. Driven by growing demand, the trend of rising freight rates is expected to continue and may further trigger the risk of port congestion.

It is worth noting that the situation in the Strait of Hormuz has completely collapsed. Some Persian Gulf routes have begun to be transferred through other ports in the region, and then bonded trucks have been delivered, and the overall transportation schedule has been adjusted earlier.

In terms of dangerous goods transportation, currently operable routes are still limited. The Red Sea direction remains open as a whole, but restrictions on the transportation of dangerous goods in the Persian Gulf are still obvious. In addition, continued tensions in the Middle East have also pushed up fuel surcharges and operating costs, further increasing market uncertainty.

Latin American routes have recently become one of the areas with the most significant growth in the market.Affected by empty flights, shrinking capacity and Brazilian tariff adjustments, market demand has grown rapidly and the relationship between supply and demand continues to be tight.

Currently, routes to the east of South America have increased significantly, and routes to the southwest and west of the United States, Mexico and the Caribbean have increased simultaneously. Most shipping companies have nearly full capacity by mid-June and plan to continue to maintain high freight rates through empty sailing strategies.

The phenomenon of "one cabin is difficult to find" has fully emerged in the current market, and some shipping companies have begun to release high-priced cabin locking products to meet the urgent supply chain needs of customers. At the same time, some low-value goods have begun to delay shipments or adjust their shipment pace due to transportation cost pressures.

In terms of equipment, due to the decline in overall container turnover efficiency, there is a shortage of containers in the market. Among them, 40-foot refrigerated containers are extremely tight, which has had a significant impact on cold chain cargo bookings.

In terms of ports, port congestion in Brazil and Mexico continues to intensify. The pressure on berthing at Brazilian ports is high, and construction and strikes are intensifying at the same time, which further increases the uncertainty of the overall logistics timeliness.

In particular, Brazil's nationwide strike on May 20 has further intensified port congestion and general risks, including the Port of Santos.

Overall, the current global shipping market has entered the peak season ahead of schedule. Affected by growing demand, tightening shipping capacity, port congestion and geopolitics, freight rates on major global routes will remain high in the coming weeks, and "easy to rise but hard to fall" may become the main theme of the short-term market.

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