The global shipping industry is currently grappling with significant volatility, with shipping rates experiencing sharp fluctuations over the past year. The Shanghai Containerized Freight Index (SCFI), a crucial benchmark for spot rates on container shipments from Shanghai to major ports worldwide, reached a high of 3,733.8 in July but has since fallen to just above 1,500, less than half of its peak. These price swings have been heavily influenced by U.S. trade policies and market dynamics.
A major factor behind last year’s surge in shipping rates was the rerouting of vessels via the Cape of Good Hope to avoid attacks by Yemen’s Houthi rebels, inflating costs. Additionally, Chinese exporters rushed to ship goods to the United States in anticipation of tariffs following Donald Trump’s election. However, as concerns over global trade volumes have grown, coupled with ongoing deliveries of newly ordered vessels, shipping rates have continued to decline.
Industry analysts anticipate that this volatility will persist throughout the year, particularly due to Trump’s protectionist trade policies. Recently, concerns have risen over potential actions aimed at curbing China’s maritime dominance. Reports indicate that Trump is preparing an executive order that could impose docking fees on vessels flagged or built in China at U.S. ports, with the revenue intended to bolster the U.S. shipbuilding industry.
Such measures are seen as a broad tariff on all imports transported by Chinese vessels, creating pressure for importers to consider alternatives. These potential actions could have profound implications for China’s shipbuilding industry, which currently accounts for 61% of global merchant ship orders. Meanwhile, the sector faces additional challenges from a global economic slowdown, particularly driven by China, with projections suggesting only a 3% growth in global shipping demand this year.
The continued delivery of large container ships is expected to put further downward pressure on freight rates.