South American route up 130%! How long can it go up?
This round of freight price increase is mainly affected by many factors. First of all, the occurrence of the Red Sea crisis led to the strain of shipping capacity, shipping companies in response to the shortage of shipping capacity and took measures to stop shipping, further increasing freight rates. Secondly, the shortage of containers has also exacerbated the increase in container prices. In addition, with the recovery of demand in all continents, the demand for freight transportation increased, which also had a positive impact on the price of consolidated freight.
However, in this round of early arrival of the bulk transportation price surge, small and medium-sized freight forwarders did not get most of the good news. Due to the price increase of shipping companies, customers are more inclined to compare prices, and the bright dispute between freight forwarders is intensified, resulting in more difficult business. Some freight forwarders said that they are now facing "difficult to find", "sea freight prices across the board" and "container" market conditions, which have brought great pressure on business.
The whole route rose, South America was the first to ship, and the freight rate rose to the sky.
According to the latest edition of the Shanghai Container Freight Rate Index (SCF), the four major routes rose across the board, Europe was slightly lower, the United States increased more significantly, the most ferocious rise is South America, South Africa and West Africa routes, and South America routes are rising sharply for several weeks. It is worth noting that the freight rate from Shanghai to South America's basic port market has doubled from the beginning of the year (January 5), an increase of 130.47%.
Recently, the global shipping market has seen a series of significant changes, especially in the South American route, a number of shipping companies including CMA CGM, COSCO, etc. are increasing their capacity investment in the South American market and opening new South American routes. The move is in response to South American countries such as Brazil increasing import taxes on items such as electric cars and solar panels. Due to the increase in tariffs, many customers want to be able to ship to South America first to avoid the increased tariff costs.
China business network shows that Brazil has decided to Everbright Yuan products back 10.8%B MERcosur foreign unified customs, but in order to make the market live should put a new regulation, the relevant agencies did not set the annual Chaohe tax allowance to 2027 because 99% of Brazil's solar panels are from China, so the earlier Chinese photovoltaic companies export to Brazil, the less tariff restrictions they face.
Sunny worldwide logistics has been established for more than 20 years, and the special line transportation in Philippines has been carried out for more than 20 years. We promise that if we cannot get the goods due to customs problems, we will give you 100% compensation for the goods. This is a promise that other freight forwarders dare not give you.
In terms of electric vehicles, Brazil also plans to increase import tariffs on electric vehicles in a gradual way, and the tax rate will increase to 35% by 226, while the zero-tariff import quota will be reduced year by year until 2026. The policy change has led Chinese automakers to ramp up exports, with South America becoming an important market.
Due to the shortage of ro-ro shipping capacity, container shipping has become one of the alternatives to automobile transportation. Recently, the shipments of some car companies such as BYD have increased significantly, resulting in some freight forwarding space being occupied by these car companies. In addition, freight rates are rising as capacity from West Africa is redeployed to South America's West African routes.
According to the information of Shanghai Far Exchange, on May 17, China's export containerized freight rate index, the South American route, East-West Africa route, South Africa route are high, respectively reached /15,9%, 14.%, 117%, especially in the main continental route, the freight rate of individual points has risen to 10,000 US dollars a container, and in the off-season, The cost is only $2,000 to $3,000. The cost of shipping on South American routes has also risen from the usual $2,000 to $3,000 to about $7,000.
The North American market is difficult and challenging.
For the North American line of the consolidation market, the recent situation shows a series of changes and challenges, first, because Amazon Prime membership Day is scheduled for 2024 and set June 20 arrival cut-off period, many merchants began to emergency stock. However, this has led to signs of individual warehouses in the US, West and US and China bursting, adding to the strain on containers.
The freight forwarder of the North American business pointed out that during the Amazon member day, large companies will book the whole container directly to the shipping company in order to stock up on goods, which further aggravates the situation of goods and may lead to the emergence of the "container" phenomenon. The so-called "dumping" usually occurs in the peak season, and the shipping company will take more than 120% of the full load of goods in order to ensure full load. However, when space is insufficient, the shipping company will refuse to carry the extra cargo at a lower rate and arrange it for the next voyage.
For small and medium-sized freight forwarders, this round of freight increases did not bring the expected good. Due to rising freight costs, customers will be more cautious in the face of high transportation costs, often choose to wait for a more appropriate time to ship, in addition, "with the container" phenomenon also makes the goods difficult to transport on schedule, further aggravating the small and medium-sized freight forwarders operating difficulties.
On the other hand, freight forwarders with stable customers are more likely to cope with this round of price increases. This kind of freight forwarder can better arrange the transportation of goods through the stable cooperation relationship with customers and reduce the risk caused by market fluctuations. In contrast, those who do not have stable customers, mainly do the distribution of goods are facing greater challenges. With freight rates rising rapidly, customers become more sensitive to offers, making it more difficult for them to obtain orders.
How long can it go up? Maersk, CMA CGM forecast is here.
For some time, due to the Houthi armed attacks in the Red Sea in Yemen, the cargo ships that originally crossed the Red Sea had to go around the Cape of Good Hope in Africa, resulting in longer routes and increased sailing times, which in turn increased the shipping rates of international containerized meal. However, the industry pointed out that with the continuous increase of container capacity, international shipping rates are expected to show a downward trend.
Maritime Trade Maritime Wind, which focuses on maritime issues in international shipping, mentioned in the report that although as of May this year, freight capacity between Europe and Asia is still short and there is a considerable lack of 36 cargo ships, but new cargo delivery has added 1.14 million TEU to the market this year, and it is expected that it will continue to increase by 2 million TEU during the year. If Red Sea shipping can return to normal, it will further free up container shipping capacity.
Ramon Fernandez, chief financial officer of the French CMA CGM Group, recently said that given that the size of the global shipping fleet may continue to expand in the future, it is expected that international container shipping rates will fall in the second half of this year. It believes that the increase in capacity will cause the supply to exceed the demand, even if the cargo ships continue to circle the Cape of Good Hope, it will be difficult to fully consume the new capacity.
Although the world's second largest liner company did not directly predict that shipping rates will fall, but the company also pointed out that the second half of this year, international container shipping capacity may be oversupply situation, thereby indirectly suggesting that freight rates may be downward trend.
However, it is not yet possible to tell exactly when Red Sea shipping will return to normal, and this uncertainty poses a further impact on the global shipping market. France's CMA CGM said it was approving on a case-by-case basis whether its ships could pass through the Red Sea waters and would seek escort from the French navy and EU maritime forces to ensure safety during the passage.
Analysts believe that despite the current risk of overcapacity, there is still room for further increases in demand from late Asia and Asia to the East Coast of the United States, which will help to absorb some of the excess capacity supply. In addition, demand for capacity is expected to be very strong during this year's peak international freight season (August to October), which may alleviate the overcapacity problem to some extent.
