Global Container Freight Rates Fall
Container freight rates have fallen sharply, with both the SCFI and WCI indexes falling, but alliance restructuring and new tax policies could support rates in the first half of 2025.
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The Shanghai Containerized Freight Index (SCFI) fell 7% on January 17 from the previous week, down 159 points to 2,130.81. It had fallen 8.6% the previous week.
Drewry's World Container Index (WCI), released on January 16, posted a smaller decline of 3% to $3,855 per FEU. Freight rates from Shanghai to Los Angeles fell 5% to $5,228 per FEU, while rates from Shanghai to New York fell 4% to $6,825 per FEU.
In a report on January 13, HSBC Global Research commented: “The SCFI collapsed 8.6% week-on-week on the averted strike, with upcoming weeks likely seeing more downward pressures due to weaker seasonality. Two more rounds of GRIs up to USD1k-3k/feu in Transpacific routes are due on 15 Jan and 2 Feb. With USEC strikes averted, we think it would be unlikely for GRIs to be implemented.”
Freight rates had previously risen following the announcement of a temporary agreement between unions and employers on the US East Coast on January 8, averting a region-wide strike that was due to start on January 15.
HSBC expects rates to continue to fall: “Spot freight rates have been cruising at an elevated level in the year-to-date, but we now expect spot rates to lose steam as risks of port disruptions subside. Fading cargo rush ahead of Chinese New Year (CNY) and weaker seasonality could exert more downward pressure on freight rates.”
However, HSBC expects carriers to implement more sailing cancellations in the run-up to Chinese New Year to curb the decline in spot rates.
Future Support
Looking ahead, the restructuring of shipping alliances from February and President-elect Donald Trump’s tax policies could help stem the decline.
“Further, we think the upcoming alliance reshuffle which could disrupt schedules and official announcement of tariffs after President-elect Trump takes the office could arrest the sharp rates decline and keep rates at a relatively high level in 1H25, boding well for transpacific contract negotiations which are usually concluded in May. This could indicate decent 1H25 profitability for shipping lines,” the report said.
See more:
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Source: Phaata.com (via Seatrade-Maritime)
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