The sea freight market is experiencing a significant downturn, particularly impacting the West Coast of the U.S. Recent reports indicate that the Shanghai Export Container Freight Index (SCFI) has declined for two consecutive weeks due to increased shipping capacity. This trend reflects a broader decrease across major transatlantic routes, with the West Coast seeing a dramatic drop.
Latest Shanghai Export Container Freight Index (SCFI) Trends
On July 19, the SCFI fell by 3.6%, reaching 3542.44 points. It marks the second week of decline, with the decrease becoming more pronounced. All four major transatlantic routes have experienced declines of over 1%, with the West Coast route being especially hard hit, showing a 6.92% drop for the week.
Factors Contributing to the Decline
Industry experts attribute this price correction to an increase in shipping capacity following a period of rapid rate hikes. Additionally, the Red Sea crisis and upcoming labor contract expirations on the U.S. East Coast are significant factors influencing the market.
Some shipping companies have repositioned smaller vessels to the West Coast to capture more cargo, further intensifying competition and affecting freight rates.
According to freight forwarders and shipping executives, the increase in additional sailings and the introduction of new routes have led to a notable decrease in West Coast rates, which have dropped from a peak of $8,500 on July 1 to the current range of $6,700-$6,900.
Similarly, East Coast rates have decreased from a high of $10,400 to around $9,800. Rates are expected to continue to decline next week, though the rate of decrease may slow.
Alphaliner Data and Market Insights
Alphaliner data shows that 271 new ships were delivered globally in the first half of the year, adding 1.68 million TEU of capacity. The second quarter saw a peak in deliveries, averaging 315,000 TEU per month. As of now, global capacity has reached 30.27 million TEU, marking a new record. An additional 1.49 million TEU of capacity is expected to be delivered in the second half of the year.
Freight industry insiders emphasize that high rates on transatlantic routes attracted a surge of additional sailings and new services, contributing to the current drop in rates. The West Coast, with its high vessel turnover rate, has been particularly affected, with spot market prices falling to the low $6,000s, a drop of over $1,000.
Current SCFI Freight Rates
- Shanghai to Europe: $5,000/TEU, down $51, -1.01% for the week.
- Shanghai to the Mediterranean: $5,361/TEU, down $63, -1.16% for the week.
- Shanghai to the U.S. West Coast: $7,124/FEU, down $530, -6.92% for the week.
- Shanghai to the U.S. East Coast: $9,751/FEU, down $130, -1.32% for the week.
- Persian Gulf: $2,193/box, down $80, -3.52% for the week.
- South America (Santos): $8,212/box, down $548, -6.26% for the week.
Intra-Asia Routes
- Far East to Kansai and Kanto in Japan: $293 and $299 respectively, unchanged from last week.
- Far East to Southeast Asia: $711/TEU, down $42, -5.57% for the week.
- Far East to Korea: $165/TEU, up $3.
Stay Competitive with Airsupply
For up-to-date information on shipping costs and to stay competitive, reach out to our team at Airsupply. We’re here to help you navigate the changing landscape of international freight.
