Freight rates in East America and Latin America rise again! Shipping space is tightened, supply chain is under pressure

As the traditional peak season gradually unfolds, the global container shipping market has not cooled down significantly. Under the intertwined influence of multiple factors such as demand resilience, capacity adjustment and port supply chain pressure, the market has shown the remarkable characteristics of "regional differentiation and intensified price games".

Recently, Asia's export volume has generally remained stable. Except for the North American market, which is affected by trade policies and weak demand, cargo volumes in other major trading regions still maintain growth. At the same time, shipping companies continue to improve profits through capacity adjustments, space control and price increase strategies, driving the Shanghai export container freight index to rebound continuously. For freight forwarding companies, the current market focus is not only on freight rate changes, but also on actual operational risks such as space guarantee, shipping schedule stability, port congestion and equipment supply. Under peak season conditions, supply chain uncertainty is becoming an important factor affecting customer experience and business profits.

From the overall market perspective, global container demand still maintains a certain growth momentum. Although the recovery of the North American market has slowed down and cargo volume growth has stagnated in June, excluding the impact of North American trade frictions and the situation in the Strait of Hormuz, trade demand in other regions is still strong, with a year-on-year growth of more than 10%.

While the demand side remains stable, shipping companies are promoting freight rate adjustments on multiple key routes, covering routes across the Pacific, Latin America, the Indian subcontinent and the Middle East. Combined with factors such as congestion at major ports in Asia and tight supply of empty containers, market freight rates are still supported in the short term. At the same time, the recovery trend of the Red Sea route is gradually emerging, and some shipping companies have begun to rearrange the Suez route. Maersk, CMA CGM and others have added new routes via the Suez Canal to alleviate port congestion and equipment shortages in Europe; COSCO Shipping Lines has also resumed some services from China to the Red Sea and expanded related regional coverage. In addition, commercial transportation in the Arctic sea lanes continues to advance, and multiple Northern Sea waterway services are scheduled to be launched in August. Arctic container ship voyages are expected to reach a record high this year, and the global shipping network is entering a new stage of adjustment.

The trans-Pacific route is still operating at a high level recently, with SCFI rising for two consecutive weeks. Among them, the performance of the eastern US market is significantly stronger than that of the western US, and the gap in spot freight rates between the two has further widened to more than US,800/box. Shipping companies plan to promote a new round of price increases in late August, but new shipping capacity in the West American market may limit the room for increases. In contrast, the Panama Canal's weight restrictions, water level impacts and related surcharges have continued to put pressure on the cost of all waterway transportation in the Eastern United States.

As the rush to rush shipments due to tariffs has ended, the market has gradually entered the Black Friday and Christmas stocking stages. Although the volume of goods has declined compared with July, the overall demand remains stable. At present, shipping companies still control effective transportation capacity through empty flights, and the tightness of space in the Eastern United States is higher than that in the Western United States. The recent typhoon weather has led to an increase in shipping schedule adjustments at Shanghai Port, and the phenomenon of port hopping and call changes has increased, further reducing the available shipping space in the market. Some cargo owners have begun to consider switching to rail transportation into the interior of the United States through ports in the West to improve transportation stability.

Freight rates on the China-Europe route have seen slight adjustments recently, but overall they remain at a relatively high level. The shipping company's FAK quotation currently remains roughly in the range of 4,300 to 4,800 US dollars/40HC. With the marginal slowdown in demand during the peak season, freight rate strategies among different shipping companies differed in late August. Some chose to maintain the current level, while others may make mild adjustments. However, as there are still many uncertainties in the supply chain, the market has not yet seen a sharp downward trend.

Recently, major ports in East China have been affected by successive typhoons. Ningbo, Shanghai, Yantian and other ports have frequently experienced shipping schedule adjustments, port jumps and berthing delays. Terminal yard pressure continues to increase, and the supply of empty containers and equipment is still tight in some areas. For freight forwarders, the current focus of customers has shifted from pure price to transportation stability, including whether containers will be dumped, whether there will be delays, whether shipping schedules will be adjusted, and whether shipping space will be guaranteed.

Compared with the Eastern US and Latin American markets, the recent adjustment pressure on the China-Mediterranean route has been more obvious. The latest market data shows that the freight index on the Mediterranean route has dropped by about 3% month-on-month. The current mainstream FAK quotation in late August remains at 4,400 to 5,200 US dollars/40HC, and some market prices have dropped to 4,100 to 4,300 US dollars/40HC.

Since late July, spot market demand has weakened, while long-term customer shipments have remained relatively stable, providing certain support to the market. However, factors such as rising fuel costs, changes in the situation in the Middle East and equipment shortages still limit the space for rapid decline in freight rates. At present, most shipping companies continue to maintain peak season surcharge arrangements and only make adjustments for some customers. In addition, the impact of typhoons continues, with waiting times for ships at some ports reaching 3 to 8 days. The tight supply of equipment in East China also affects the reliability of shipping schedules. In the short term, the Mediterranean route may continue to maintain a volatile adjustment trend.

Recently, routes from China to Latin America have become a hot topic in the market. Driven by factors such as the impact of typhoons at the departure port, port congestion, capacity adjustments and Panama Canal restrictions, shipping companies continue to increase prices, and the market is expected to remain strong from late August to early September.

The growth of new energy vehicle exports has become an important supporting factor for Latin American routes. As the capacity of ro-ro ships tightens, some automobiles and industrial chain goods have turned to container transportation, further increasing the demand for space. In addition, exports of photovoltaics, auto parts, machinery and equipment have remained stable, and demand for general cargo transportation has also been relatively stable. At present, the supply of some 40GP, 40HC and reefer container resources is tight, and there is still congestion in major export ports such as Shanghai and Ningbo and some destination ports in Latin America. As the Amazon basin enters the low-water season in the future, transportation costs from inland points such as Manaus may be further affected by low-water surcharges.

Taken together, the global container shipping market still maintains strong resilience, but the trends of different routes are obviously differentiated. Affected by shrinking shipping capacity and cost pressure, the markets in the Eastern United States and Latin America still have short-term upward momentum; the European and Mediterranean markets are more affected by changes in demand and have entered a stage of shock.

For freight forwarding companies, they need to focus on: the pace of price increases and surcharge adjustments by shipping companies, changes in space supply on popular routes, shipping schedule risks caused by port congestion and typhoons, empty container supply and equipment deployment, and transportation changes brought about by adjustments to the Red Sea, Suez and Arctic routes. In the peak season market, price is only part of the competition. Stable space resources, timely information judgment and supply chain coordination capabilities will become important advantages for freight forwarding companies to win customers.