Several shipping lines have reduced freight rates
There has been a notable development in international sea freight rates. The rates for the European routes have seen a correction, ending the previous nine-week upward trend. The market is now focused on whether the European route rates have peaked. Meanwhile, freight rates for the Persian Gulf, West Africa, and South Africa routes have experienced significant declines.
Despite the overall trend adjustment, the performance of the East Coast US routes remains strong. The freight rate for a 40-foot container (FEU) is approaching the $10,000 mark, reaching its highest level since late June 2022.
Several companies have reduced freight rates for the West Coast US routes
In terms of the US routes: As freight rates continue to rise and new ships are gradually introduced to the market, the shipping market rates are starting to show signs of softening, as anticipated by the industry.
To address this change, industry giant Mediterranean Shipping Company (MSC) notified its customers on the evening of the 4th, announcing that the current rates will be extended until the end of the month. This means the planned increase of $1,000 per 40-foot container for both the West Coast and East Coast US routes, which was initially scheduled for July 15th, has been canceled.
Meanwhile, South Korean shipping company SM Line also notified its customers that the freight rate for the West Coast US routes per FEU has been reduced from around $8,100 to $7,500, effective immediately.
In June, to respond to market changes and growing demand, several shipping companies took proactive measures. MSC reinstated the MUSTANG service from Asia to the US West Coast. Singapore’s SeaLead introduced a fast service connecting China and Korea to Long Beach on the US West Coast in mid-June. COSCO also made a significant move, launching the SEA3 express service on June 24th, designed to meet cross-border e-commerce needs. This service operates with six container ships, each with a capacity of 8,533 TEU, and runs through Kaohsiung, Xiamen, and Yantian to Long Beach.
Additionally, TS Lines decided to re-enter the US West Coast market. They plan to start with ad-hoc sailings in July and officially join SeaLead’s express service to the US West Coast in August, further strengthening their market position through a vessel-sharing partnership.
Due to the rate adjustments, several shipping companies, including SM Line, reduced freight rates for the US West Coast routes less than a week after the price increase implemented on July 1st. The primary reason for this reduction is the emergence of ad-hoc sailings and new routes. Meanwhile, Yang Ming’s rate increase for the US East Coast was halved, with an increase of only $1,000. Whether this will prompt other shipping companies to follow suit remains to be seen.
Regarding the European routes: CMA CGM, seizing the opportunity of the third-quarter peak season, has deployed seven medium-sized container ships with a capacity of approximately 7,000 TEU each. They have launched a temporary Asia-Europe service.
This route originates from Asia and includes key ports such as Le Havre and Antwerp in Northern Europe, as well as ports like Fos and Malta in the Mediterranean.
The inaugural voyage was carried out by a 6,350 TEU container ship, which departed from Yantian Port in China on June 30th. This service is expected to continue until the end of September.
According to Peter Sand, Chief Analyst at the Norwegian freight rate information platform Xeneta, Europe’s current GDP growth rate is 0.5%, which does not align with the “sharp increase in freight volumes.”
Simultaneously, tensions in the Middle East Red Sea region have prompted European importers to advance their procurement plans. Additionally, frequent strikes in France and Germany have further disrupted shipping schedules.
Despite these factors, industry experts generally believe that current demand has not truly reached peak levels. Therefore, there is a possibility that freight rates could experience a correction at any time.
