The strike in the east coast of the United States officially ended on the 4th of this month. Industry insiders analyzed that with the arrival of the off-season and the commissioning of a large number of new ships, freight rates are expected to fall faster. The head of a large freight forwarding company agreed with this, believing that freight rates are difficult to maintain and that a fall is an inevitable trend. However, shipping companies may stabilize freight rates by adjusting the space, so freight rates may not fall sharply immediately, and further observation is needed after the Golden Week holiday.
Industry executives also mentioned that due to concerns about possible strikes in the east coast of the United States, American importers have purchased goods in advance this year, which may make the off-season in the fourth quarter even more deserted. Although some of China's cargo exports to the United States have been dispersed to Southeast Asia, China still accounts for nearly 60% of Asia's cargo exports to the United States. Therefore, after the National Day holiday will become the main time to observe market changes. A senior executive of a freight forwarding company further analyzed the strategy of the shipping company. He pointed out that the shipping company was already familiar with the space adjustment mechanism in the second half of last year. Even if the market environment is not good, this mechanism can be used to stabilize freight rates or even drive up freight rates. Since container shipping companies have strong funds and are not short of cash, there is no need to carry cargo at a loss. However, there is another view that due to the poor market situation, freight rates may fall rapidly to a certain level so that non-alliance ships with higher operating costs can withdraw from the US line market. But this price will still remain above the level at which alliance ships can make a profit. For example, the freight rate of the US West Coast may be between US$2,000 and US$2,500 per large container (40-foot container). In addition, in order to layout the new alliance next year, shipping companies may also win more customer support by lowering prices. The latest issue of Drewry's Container Freight Index (WCI) shows that the comprehensive freight rate fell by 5% in a single week. Even in the face of the US East Coast port strike that started on October 1, the US East Coast freight rate released on the 3rd still showed a downward trend. With the end of the US East Coast strike on the 4th, the speed of freight rate decline may further accelerate. View article: Freight rates continue to decline, nearly 100 flights are canceled, and shipping stocks plummet. At the same time, Europe and the Mediterranean routes have also been affected by the Red Sea crisis, and ships need to detour, resulting in freight rates falling by 8% and 9% respectively; the US West Coast route fell by 4% and the US East Coast route fell by 2%. The impact of the end of the strike will be reflected in the freight rates released next Thursday, October 10.
Overall, the container shipping market is facing huge oversupply pressure. The current pending new ship orders will increase the global supply of container ships by 22%, and this pressure will continue to rise. The delivery of new ships is also setting new records. The capacity of container ships delivered in 2023 reached 2.3 million TEUs, and 2.14 million TEUs have been delivered in the first eight months of 2024. As of September 7, 2024, the global pending container new ship orders reached 6.84 million TEUs, accounting for 22% of the current global container fleet capacity, which is equivalent to adding the capacity of four container shipping companies such as Evergreen Marine, the world's seventh largest container shipping company.
