In mid-July, the price of each large box of American lines increased by another $2,000! Freight rates will exceed 10,000 yuan mark

Sunny Worldwide LogisticsIt is a logistics company with more than 20 years of transportation experience, specializing in markets such as Europe, the United States, Canada, Australia, and Southeast Asia. It is more of a cargo owner than a cargo owner~

Although in the second half of June, 11 overtime ships appeared on the US line, COSCO Shipping Lines and Singapore's SeaLead Company have launched new direct routes to the US West.But this has not changed the plan to increase the price of each large box by US,000 for European and American routes, which was originally scheduled to be implemented on the 15th.

Large cargo companies recently pointed out that the strikes in the East United States may bring additional profit opportunities to shipping companies. Some shipping companies such asSouth Korea's HMM and Japan's ONE have proposed plans to increase the freight rate per large box on the US line to US,000 on July 15.In addition, Evergreen Shipping will also adjust the peak season surcharge for the US line starting from July 13, increasing from the original US0 to US,200.

Last week, Drewry predicted that freight rates outside China would continue to rise next week due to the early start of the peak season. The industry speculates that this may be related to the US imposing additional tariffs on some goods starting from August 1. However, on the evening of Thursday (13th), Drewry revised its view, pointing out that freight rates from China will continue to rise next week due to congestion at Asian ports.

In addition, the International Longshoremen's Association (ILA) recently announced that it has suspended negotiations with the United States Maritime Alliance (USMX) on a new labor contract for port workers on the U.S. East Coast and Gulf Coast. The reason for the suspension is the impact of automation on Maersk’s dedicated terminals on workers’ rights. Currently, the existing labor contract agreement will expire on September 30.

Peter Sand, chief analyst at Xeneta, noted that shippers have been loading import cargoes ahead of the traditional peak season in the third quarter due to concerns about the ongoing impact of the Red Sea conflict on supply chains. He further suggested that shippers may accelerate this approach if the U.S. Eastern and Gulf Coasts face the risk of significant disruption later this year.

Although the industry generally believes that the government is unlikely to allow strikes to occur in view of the upcoming U.S. presidential election, shippers are still taking necessary precautions, of which early shipments are the immediate response strategy.

However, shipping company executives believe that US President Biden will work hard to broker a ceasefire between Palestine and Israel to support his election prospects. In this expectation, shippers may choose to delay shipments to avoid the current high freight rates. At the same time, due to the longer voyages of European routes, the peak season starts earlier than that of the US routes and may end earlier. It is expected that the increase in freight rates will slow down in the third quarter and decline in the fourth quarter.

Regarding the current price increase trend in the shipping market, the heads of two large cargo canvassing companies hold different views. Company A believes that the price increase trend will continue in the third quarter, and since the ceasefire between Palestine and Israel is relatively difficult, it remains to be seen whether the price can be increased by US,000 at a time. Company B holds a different view, believing that the U.S.'s additional tariffs will lead to a reduction in market volume, thereby reducing freight rate increases. At the same time, we have noticed the continuous emergence of overtime ships and new routes. For example, the world's two largest shipping companies, Mediterranean Shipping Company and the 2M Alliance of Maersk, announced on July 7 the opening of a new US-Western route, calling at Yantian, Ningbo, Shanghai and the US Port of Long Beach..In addition, small and medium-sized shipping companies that joined the US-Western route during the epidemic also plan to re-enter the market. The large amount of new shipping capacity may shake freight prices.

However, the two companies agree on one point: freight rates will fall in the fourth quarter. Company A expects freight rates to begin falling in November, while Company B believes they will begin to decline in October. Although both companies expect freight rates to fall quickly in the fourth quarter, they also acknowledge that shipping companies have already made considerable profits in the first three quarters.

The shipping company plans to carry out a wave of price increases on the 15th. It is expected that the freight rate for the West Coast will rise to US,100-7,400, the freight rate for the East US will rise to US,300-8,400, and the freight rate for the European route will rise to US,400-7,500. In addition, there are plans to increase prices for European and American lines by another US,000 per large box on July 1. However, it is still unclear whether the increase will be doubled to ,000 on July 15. If it really rises above 2,000 US dollars, then the freight rate will exceed the 10,000 yuan mark.

Large cargo companies pointed out that the current high freight prices have had an impact on shipments on the Middle East and Africa routes. Freight rates on these routes have fallen since low-value products cannot afford the high freight rates.