U.S. shipping rates have seen a dramatic decline due to waning demand, particularly impacting small deep-sea routes. The tariff conflict between the United States and China has settled, leading to a reduction in push demand—shipments made to avoid tariffs. Consequently, freight rates for maritime transport from Asia to the U.S. have plummeted.
While export companies benefit from lower costs, shipping firms that recently ventured into U.S. routes are facing challenges. Companies like HMM and SM Line, which rely heavily on these routes for revenue, are among those affected. Recent figures from the shipping industry indicate that as of the 20th, the freight rate for a 40-foot container (1 FEU) from Shanghai to the U.S. West Coast dropped to $2,772, marking a 33% decline from the previous week.
Overall, freight rates for U.S. routes fell 21% during the same timeframe, with the Shanghai Containerized Freight Index (SCFI) falling 10% to 1,869.59. This downturn can be attributed to diminished push demand combined with smaller shipping companies expanding their services, thus increasing supply. In Korea, notable developments include Korea Marine Transport resuming U.S. route services for the first time in 40 years, while Sinokor Merchant Marine launched a new route to Mexico, signifying its entry into long-distance shipping.
The rates to Mexico, often utilized as an alternative to U.S. exports, are considerably influenced by U.S. routes. Despite the rise in supply due to new entries, demand has not matched this growth. The National Retail Federation predicts an 8.2% year-on-year decrease in July import volumes, totaling 2.13 million TEU.
Industry analysts warn that shipping companies venturing into long-distance routes may face financial losses, particularly for smaller vessels, as lower freight rates could lead to reduced profitability.