Container shipping rates from Asia to the US have experienced a significant drop this week, primarily due to the failure of general rate increases (GRIs) initiated on June 1 to hold. According to market intelligence group Linerlytica, this sharp decline is attributed to an oversupply of shipping capacity.
Freight rates to the US West Coast have faced their most considerable weekly losses in the past fortnight. The unsuccessful retention of the rate hikes from June 1 has put the peak season surcharge for contract customers at considerable risk.
Despite this downturn in the transpacific shipping corridor, secondary routes are still thriving thanks to strong cargo volumes, and charter rates remain stable amid limited available tonnage. Carriers had previously removed excess capacity from the Asia-US trade lane in May, following the imposition of high tariffs on China during former US President Donald Trump’s administration.
With the recent agreement on a new trade deal between the two nations, carriers are now eager to restore capacity. The global Shanghai Containerized Freight Index (SCFI) has reversed the gains from the past three weeks, with rates to the US West Coast dropping 20% week-on-week and rates to the US East Coast falling by 7.5%.
In related news, global shipping concerns in the Strait of Hormuz have decreased due to a ceasefire between Israel and Iran. Lars Jensen, president of Vespucci Maritime, confirmed that the strait remains operational, allowing global container shipping company Hapag-Lloyd to continue its usual activities.
However, threats from Yemen-backed Houthi rebels have led carriers to steer clear of the Red Sea and Suez Canal, creating ongoing operational risks for shipping in that region.