Freight rates have rebounded slightly, with flight cancellations and increased risk of container dumping

Recently, container spot freight rates on trans Pacific and Asia Europe routes have shown a weak rebound trend, with the Asia Europe route finally stopping its decline after three weeks of decline. However, the market is generally cautious about whether the new round of price increase plans to be implemented by shipping companies can be successfully implemented.

According to the World Container Index (WCI) released by Drewry, freight rates on the Asia Europe route from Shanghai to Rotterdam increased by 2%, closing at $2170 per 40 feet; The Shanghai to Genoa route rose slightly by 1%, closing at $3075/40 feet. In order to further increase freight rates, shipping companies plan to implement a new unified freight rate (FAK) starting from May 15th. The target price for the Nordic route is set at $3500-4500 per 40 feet, and the target price for the Mediterranean route is set at $4500-4600 per 40 feet. This slight rebound in freight rates has gained some market initiative for the implementation of the plan.

However, both market feedback and institutional analysis remain cautious about the sustainability of price increases. According to the Asia Europe freight forwarder's disclosure to industry media, freight rates remained relatively stable from April to the first half of May. Although there were signs of an increase of about $200/TEU in the second half of May due to the cancellation of large-scale flights, there were also issues such as tight space allocation and cargo dumping, which caused certain difficulties for shipments.

According to Deluri data, the effective capacity of Asia Europe Nordic routes is expected to decrease by 3% month on month in May, and the effective capacity of Mediterranean routes is expected to decrease by 10% month on month. However, Linerlytica analysts pointed out that the reduction in capacity in May was limited, and capacity is expected to rebound in June. It is difficult for shipping companies to achieve the target of three rounds of price increases for the Nordic route, and relying solely on capacity adjustments is difficult to support the new FAK price level.

The trans Pacific route has shown relatively more prominent price increases due to the imposition of surcharges. WCI data shows that the freight rates for the Shanghai to Los Angeles route increased by 5% this week, closing at $3062 per 40 feet; The Shanghai to New York route rose 7% to close at $3721 per 40 feet. However, the freight forwarder has provided feedback that there is still a certain discount on the actual transaction price in the market, with some 40 foot freight rates on the West Coast as low as $2500 and on the East Coast as low as $3550, which is significantly different from the index quotation.

At the same time, the shortage of cabin space and the risk of supply chain disruptions are continuing to intensify. Freight forwarder FreightRight on the West Coast warns that although the cabin space can theoretically be booked normally, a large number of goods have been dumped due to capacity reduction, resulting in delayed shipment times. More seriously, some ships were forced to unload at the Busan transit port in South Korea due to overloading issues, in order to alleviate the load pressure of trans Pacific navigation. The organization expects that the cancellation rate of flights for the remaining time of May will be higher than that of April, and THE Alliance has also announced that it will make significant adjustments to its trans Pacific route services in early May, implementing multiple flight cancellations, further affecting the pace of shipments.

In response to the current market situation, it is recommended that relevant enterprises plan their shipment plans in advance, reserve logistics cycles reasonably, closely monitor changes in airline capacity and freight rates, lock in cabin space in advance, avoid potential risks such as container dumping and shipping delays, and ensure supply chain stability.

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