- SCFI Increase: The Shanghai Container Freight Index (SCFI) rose for the sixth consecutive week, reaching 2505.17 points, driven by U.S. market trends.
- U.S. Freight Trends: U.S. East and West Coast rates increased by 5.66% and 9.1%, respectively, due to labor negotiations at East Coast terminals.
- European Market Decline: Due to off-season conditions, European and Mediterranean freight rates declined by 3.75% and 0.87%.
- Labor Negotiations Impact: The International Longshoremen’s Association and USMX face disagreements over automation, with potential strikes from January 15.
- Shipping Companies’ Response: Evergreen, Yangming, and Wanhai are preparing operational adjustments in case of strikes.
On January 3, the Shanghai export container Freight Index (SCFI) rose 44.83 points to 2505.17 points, a weekly increase of 1.82%, showing a rising trend for six consecutive weeks. The rise was mainly driven by the United States, the United States East and the United States West rose 5.66% and 9.1%, respectively, reports Sungreen Logistics Group.
Freight rates drop $800 to secure cargo
The United States East terminal labor negotiations entered the countdown, is expected to return to the negotiating table on the 7th, the result of this negotiation will become a key vane to observe the trend of the United States line freight. After experiencing two days of price increases on New Year’s Day, some shipping companies provide a discount of 400-500 US dollars to grab goods, and some shipping companies inform large customers that the freight rate of each large box is directly reduced by 800 US dollars.
At the same time, the European line entered the traditional off-season, showing a downward trend, the European line and the Mediterranean route fell 3.75% and 0.87% respectively. In the spring of 2025, container rates clearly reflected anxiety over terminal negotiations in North America, with Far East to North America rates rising while Far East to Europe and the Mediterranean rates falling.
The International Longshoremen’s Association (ILA) and the United States Maritime Union (USMX), which represents the management, have been unable to reach a consensus on automation issues, leading to the threat of a strike at the Eastern United States terminal. Logistics operators point out that the closer the Chinese New Year holiday gets, the more freight increases are likely to occur as labor and management fail to agree on automation. If the negotiation of the dockers on July 7 is successful, the strike factor will be removed and market rates will reflect changes in supply and demand. However, if the negotiations do not go well, the strike from January 15 will cause serious delays. If the strike lasts for more than seven days, the shipping market will no longer be in a low season until the first quarter of the year.
Shipping giants Evergreen, Yangming and Wanhai all believe that 2025 will be full of variables and challenges for the global cargo consolidation industry. As the countdown to the talks begins, the three companies have begun drawing up plans to adjust ship speeds and berthing to reduce the impact on customers in the event of a strike.
At the same time, freight forwarders in the industry said that with the approaching of the end of the year, factories have been on holiday to reduce shipments, and shipping companies have begun to bargain for flights during the Spring Festival holiday. For example, Maersk and other shipping companies Europe line online quotes in mid-to-late January has fallen below the $4,000 level. The closer the Chinese New Year is, the stock price will continue to be repaired, and the shipping company will also reduce the supply of shipping capacity by reducing shifts to support the price.
Although the United States line freight rate rose against the trend, but the impact of shipping companies to stockpile goods to make profits, the shipping company’s price increase plan has not been fully realized. However, due to the doubts and support of the strike in the East of the United States, especially the large increase in the freight rate of the West of the United States, mainly benefited from the cargo transfer effect in the East of the United States. The United States and East labor and management are expected to return to the negotiating table on the 7th, which will determine whether the United States line freight rate rise will continue.
The shipping company has notified that the annual stock price period is limited to 14 days, which is closely related to the final negotiation deadline of the new annual contract between labor and management of the United States East Terminal on 15 days. In the event of a strike or sabotage, major shipping lines will be subject to various port congestion surcharges on shipments to and from the United States/Canada. On the contrary, if the labor negotiations in the United States and the East end peacefully, there may be room for lower freight rates in the United States before the year.
However, the container shipping market again experienced significant price fluctuations in just two days after the large ship companies sharply increased their prices on the 1st. Some shipping companies, in order to attract those who are not eager to ship exports in the Lunar New Year, announced on the evening of the 2nd to offer a discount of 400-500 US dollars from the 3rd, which is the so-called “stock price” and “stock price” during the Spring Festival. However, near the end of the day, a heavyweight shipping company was dissatisfied with the ratio of the long contract price and spot price provided by other shipping companies to customers, resulting in the actual freight rate of only about $5,000, so it decided to inform its large customers that the freight rate of each large box was directly reduced by $800.
Senior executives of large shipping companies revealed that they had received the news of steep price cuts from members of the OA Ocean Alliance on the evening of the 2nd. At present, shipping is in the off-season, the volume of goods is not sufficient, and there is no large number of goods to avoid customs duties. One shipping company had predicted a $1, 500 increase in the West-America freight rate by reducing the number of sailings and reducing the supply of capacity caused by a ship accident in Yangming. However, because THE members of THE alliance to which Yang Ming belongs did not fully follow the increase, the ships of the Alliance were full, while the ships of the OA Alliance were not full, which triggered the temporary sharp price reduction.
Compared with SCFI rising for 6 consecutive weeks, the spot freight rate of the United States line has been sharply reduced without warning, shipping industry analysis, the current freight rate is still very high, non-high-tech products shippers are difficult to afford, it is estimated that there is room for subsequent price cuts, and the closer the Spring Festival, the price will be lower. The so-called dumping price is also known as the stock price, mainly locked not in a hurry to ship in the lunar year before the shippers, in the preferential price out of the cage, spot freight synchronous pull down, the west line per FEU came to $5100, the United States east line fell to $6100. In addition, on the news of the United States East Terminal labor negotiations, the two sides plan to restart negotiations on the 7th, if it can be peacefully resolved before the deadline of the 15th, then there is still the possibility of continuous reduction of freight rates.
Looking ahead to 2025, the overall capacity oversupply gap is likely to converge, and port handling costs will also be high. However, due to the prospect of continuing to circumnavigate the Cape of Good Hope, the long term freight rate is expected to be higher than 2024. However, it will not be officially confirmed until March or April. At the same time, manufacturers will continue to move to Southeast Asia in response to the Sino-US trade war, and the displacement of goods will continue. Geopolitics and the risk of a strike in the East of the United States are also adding to operational uncertainties, and investors need to keep a close eye on market changes.
SCFI Rates:
- Shanghai to Europe freight rate of 2,851 US dollars /TEU, down 111 US dollars, a weekly decline of 3.7%;
- Shanghai to the Mediterranean freight rate of 3,747 US dollars /TEU, down 33 US dollars, weekly decline of 0.9%;
- Shanghai to the United States freight rate 4997 US dollars /FEU, up 416 US dollars, a weekly increase of 9.1%;
- Shanghai to the United States East freight 6418 US dollars /FEU, up 344 US dollars, a weekly increase of 5.7%;
- Persian Gulf shipping rate of 1,472 US dollars per box, up 28 US dollars, a weekly increase of 1.9%;
- South American route (Santos) per box freight of $5,344, down $124, a weekly decline of 2.3%;
- Southeast Asia route (Singapore) freight per box 655 US dollars, down 17 US dollars, or 2.52%.
- The portion of the offshore line, the Far East to Kansai, Japan, the Far East to Kanto, Japan, and the Far East to Korea each increased by $1 per TEU compared to the previous phase.
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Source: Sungreen Logistics Group
