Freight Rates Rise for Third Straight Week, Trans-Pacific Leads with Divergent Trends

Affected by factors such as continued geopolitical disturbances and proactive reductions in shipping capacity by shipping companies, the global container shipping market has shown a recovery trend recently. The latest data released by the Shanghai Shipping Exchange on April 10 showed that the Shanghai Export Container Freight Index (SCFI) reported 1,890.77 points, an increase of 35.81 points or 1.93% from the previous period. It has been rising for the third consecutive week.

Judging from the performance of each route, the North American direction has the most prominent increase and has become the main driving force for this round of freight rate rebound, while the European direction remains weak. Specifically, the freight rate for the Shanghai to US West route increased by 8.2% to US,552/FEU, and the freight rate for the Shanghai to US East route increased by 4.9% to US,518/FEU. The price difference between the two widened to approximately US6. Affected by the situation in the Middle East, the freight rate on the route from Shanghai to the Persian Gulf increased simultaneously by 4.8%, reaching US,167/TEU. In contrast, demand in the European market is sluggish. The freight rate from Shanghai to the European basic port fell by 6.2% to US,547/TEU, and the freight rate on the Mediterranean route also fell by 3.5% to US,590/TEU.

Industry insiders pointed out that the continued strength of U.S. freight rates is mainly due to shipping companies' proactive tightening of capacity supply through work reduction and cabin control strategies. At the same time, U.S. market demand remains relatively stable, which together support the upward trend in spot freight rates. According to feedback from freight forwarding companies, the space on the US East Route is currently tight, and some voyages are nearly full. The market quotation is generally around US,700/FEU; the spot price on the US West Route is approximately US,700 to 2,800 US$/FEU. Although some shipping companies still offer long-term contract prices of about US,800/FEU, as the market upward trend is established and shipping companies plan to further adjust prices in mid-April, the price difference between long-term contracts and spot prices is expected to gradually narrow.

Geopolitical risks also provided support for freight rates. Navigation in the Strait of Hormuz has not yet been fully restored, and ships may be diverted or subject to stricter controls, resulting in longer voyages. Coupled with rising international oil price fluctuations and rising war risk insurance premiums, the overall operating costs have increased significantly. Wanhai Shipping said that against the backdrop of continued uncertainty in the Middle East, freight rates on various routes are gradually reflecting rising cost pressures, and two rounds of freight rate increases on routes in Asia have been planned in April.

European routes are under pressure due to lack of demand. Although some voyages have been adjusted, the overall capacity reduction is limited and the supply and demand relationship is still loose. Market data shows that the current freight rate per 40-foot container on the European line is approximately US,100 to US,400. The industry expects that freight rates on European routes will be difficult to rebound significantly in the short term and may remain low and volatile.

It is worth noting that in addition to SCFI, the China Export Container Freight Index (CCFI) and the Drewry World Container Freight Index (WCI) also achieved three consecutive increases this week, indicating an overall recovery trend in the global container shipping market. As the annual long-term contract negotiations for the U.S. line gradually begin in mid-to-late April, the market generally expects that the short-term downward space for freight rates will be limited. Combined with factors such as capacity regulation and geopolitical risks, freight rates may maintain a volatile and strong trend for a period of time. Overall, under the combined influence of shrinking shipping capacity, rising costs and geopolitical risks, the global container shipping market is showing the characteristics of a "structural rise" - the US line is leading the rise, and the European line continues to be under pressure. This differentiated pattern will continue in the short term.

Attached: SCFI’s main route freight rates on April 10

• Far East to Europe: ,547/TEU, down 6.24%

• Far East to Mediterranean: US,590/TEU, down 3.50%

• Far East to West America: ,552/FEU, up 8.18%

• Far East to US East: ,518/FEU, up 4.99%

• Persian Gulf route: US,167/TEU, up 4.78%

• South American route (Santos): US,501/TEU, down 4.14%

• Australia-New Zealand route: US9/TEU, up 6.9%

In terms of the near-ocean line, the freight rate from the Far East to Southeast Asia (Singapore) increased by 2.52% to US5/TEU; the freight rates for the Kansai and Kanto routes in Japan remained unchanged; the freight rate from the Far East to South Korea increased slightly by US.

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