May 8, 2025
Recently, the global shipping market has changed significantly due to the US tariff policy on China. Since the US tariffs on China took effect on April 9, trans-Pacific route cargo volume has dropped sharply, and the number of freight container bookings from China to the United States has dropped by more than 60%. However, the freight rates of the West Coast and East Coast of the United States have shown a trend of rising instead of falling, which is contrary to the common sense of market supply and demand.
According to freight forwarding companies, the two major routes of the West Coast and East Coast of the United States have firmly held the price barriers of US$2,000/FEU and US$3,000/FEU respectively in the past two weeks. The latest SCFI data released by the Shanghai Shipping Exchange shows that the comprehensive freight index is 1340.93 points, a slight decrease of 0.51% from the previous period, and the overall market freight rates are on a downward trend. But surprisingly, the freight rates from Shanghai to the West Coast and East Coast of the United States climbed to US$2,272/FEU and US$3,283/FEU, respectively, up 6.12% and 0.80% from the previous period, becoming an abnormal phenomenon in the market.
Faced with the sharp decline in cargo volume, some shipping companies tried to maintain profits by increasing fees. For example, some shipping companies imposed peak season surcharges (PSS) on related routes. However, industry insiders expressed concerns about this, pointing out that the fundamentals of the current shipping market with less cargo and more ships have not changed, and the shipping companies' forced price increases may not last long, and there is a risk of subsequent freight rate retracement. This kind of artificial price intervention may only be a short-term phenomenon in the context of the imbalance between market supply and demand, and cannot fundamentally change the market trend.
In order to alleviate the impact of the tariff war on business, many shipping companies have adopted a series of radical capacity adjustment strategies. A large number of shipping companies have canceled some routes or voyages, and transferred the ships originally invested in the US line to the European line to seek new business growth points. According to market news, more than 66,500 TEUs of shipping capacity have been transferred from the US to the European route. Although this capacity transfer is aimed at optimizing resource allocation, it has had a negative impact on the European-European market, making it difficult for European freight rates to stop falling.
The latest data shows that freight rates from Shanghai to Europe and the Mediterranean have dropped to US$1,200/TEU and US$2,089/TEU, respectively, down 4.76% and 1.88% from the previous period, respectively, and have been falling for three consecutive weeks. In order to save the declining freight rates on the European route, some shipping companies have further adjusted their capacity layout, such as withdrawing some 24,000 TEU giant container ships from the Far East-Northern Europe route and investing in Asia-West Africa and the Mediterranean route with higher profit margins. Mediterranean Shipping Company (MSC) even directly closed the Asia-Mediterranean Phoenix route.
The current shipping market is under the shadow of the tariff war. The cargo volume on the trans-Pacific route has dropped sharply. The freight rates on the US route have grown against the trend while facing unstable factors. The freight rates on the Europe-Europe route have continued to fall. Shipping companies are struggling to find a balance in the complex market environment. The future market trend is still full of uncertainty. Companies engaged in related trade need to pay close attention to market trends and make preparations in advance.
