Freight rates start to decline?

Freight rates start to decline? Most shipping companies lowered their rates! The US West Coast has dropped below $8,000

The price increase on July 1 was frustrated! Most shipping companies lowered their rates, and the US West Coast has dropped below $8,000!

Super-large freight forwarding companies pointed out that the container shipping price increase plan originally scheduled for July 1 triggered a wave of market price cuts due to the
Mediterranean Shipping Company (MSC) maintaining the original price on the US West Coast, and most companies have lowered their freight rates. The price increase on the US East
 Coast has been basically implemented, but there is a possibility of a reduction in the future. MSC announced that the freight rate will be maintained until the end of July, bringing respite
 to shippers. At the same time, European freight rates are close to their highs, Singapore port congestion has improved, and global port congestion is expected to ease with the early
peak season and increased capacity.

Super-large freight forwarding companies recently pointed out that the container shipping market price increase plan originally scheduled for July 1 has encountered variables. Originally,
various companies planned to increase the freight rate per LTU on the US West Coast from US$7,100-7,500 to US$8,100-8,500, but the industry giant Mediterranean Shipping (MSC)
unexpectedly maintained the original price of US$7,500. This move quickly triggered a chain reaction, and other shipping companies followed suit and adopted price reduction strategies
 to cope with market changes. As of last Friday (5th), most companies had lowered their freight rates to below US$7,900, and the latest price announced by Maersk on its official website last
Friday evening was reduced to US$7,600.

Mediterranean Shipping, whose capacity market share has exceeded 20%, has an increasing influence on the market. In mid-June, MSC took the lead in announcing a US$2,000 increase
 in freight rates on the US East Coast, prompting other shipping companies that originally planned to increase their prices by US$1,000 to follow its steps and make multiple adjustments.
 However, on the US West Coast, MSC canceled its original US$1,000 price increase plan, a decision that directly affected the loading capacity and pricing strategies of other shipping companies.

Subsequently, the market observed that SM LINE of South Korea first reduced the freight rate by US$600 per LTC, followed by COSCO SHIPPING, OOCL and OCEANS NETWORK,
which also reduced the freight rate by US$200-300. As of last Friday, except for one large shipping company that still quoted US$8,000, most other companies had reduced the freight
rate to below US$7,900, and even two shipping companies offered preferential freight rates of US$7,500 for specific flights.

Freight forwarding industry insiders believe that MSC's pricing strategy on the US West Coast has significantly affected the freight rate trend of the entire market. In addition, since June,
the increase in overtime ships and new routes in the US West Coast, as well as the expected continued increase in capacity this month, have gradually eased the originally tight space situation,
 further promoting the downward trend of freight rates.

In contrast, since no significant new capacity has been seen on the US East Coast route, most of the price increase plans on July 1 have been successfully implemented. Although Yang Ming Marine
Transport maintained the original $1,000 increase, COSCO Shipping and OOCL notified customers last Friday that they would reduce the price by $100 per container. Although this reduction is relatively
limited compared to the $2,000 increase on July 1, it still reflects the market's sensitivity to freight rate adjustments. At the same time, considering the continued increase in the volume of traffic in the
Panama Canal and the possibility of a strike in the East Coast of the United States, senior executives of foreign shipping companies predict that the freight rates in the East Coast of the United States
may still be further reduced in the future.

It is worth noting that MSC notified customers on the 4th of this month that the current freight rates for the West Coast and East Coast routes will remain until the end of this month, that is,
there will be no price increase on July 15. This decision undoubtedly brought a breath of fresh air to shippers.

In addition, in Europe, although the GDP growth rate is only 0.5%, the Red Sea crisis still supports the increase in freight rates to a certain extent. However, the industry generally believes that
 freight rates are close to the high point. Unless there is a serious strike at an important hub port, there is limited room for freight rate increases and more room for reduction.

On the other hand, the congestion in Singapore, the world's second largest port, has also improved. The port has reduced the waiting time from the longest 7 days to 2 to 3 days by increasing
booms and manpower, reopening old berths and yards, and adjusting the flight calling strategy of shipping companies.

Clarkson's report shows that the current global port congestion is about 9 million TEUs (20-foot containers), close to the peak level of 9.6 million TEUs during the epidemic. However, this year's container
shipping peak season started early and the probability of ending early is also high. Although Drewry estimates that the congestion of major international transshipment ports will remain high,
it is expected that the congestion will ease with the increase in capacity and the resumption of flight plans.