Stormy Seas Ahead: US East Coast Shipping Prices Plummet as Strike Looms, SCFI Takes a 10% Hit
Shipping Market Trends: Prices and Volumes Fall Ahead of US Strike
The shipping market is experiencing a decline in prices and volumes ahead of a potential strike in the Eastern United States. The Shanghai SCFI export freight index has fallen for six consecutive times, with a cumulative drop of 828.3 points in September.
Decline in Shipping Market
The Shanghai SCFI export freight index continued to fall, closing at 2,135.08 points on September 27th, a decline of 9.77%. The US-West route fell 9.16%, while the US East Line freight rate decreased by US$2,813, or about 33%, in September.
The European route experienced the deepest drop, falling by US$1,626 in September, a decline of 41.95%. The industry attributes this decline to weakening demand, cargo owner expectations, and the approaching Golden Week holiday in China.
Impact of Strike Threat
The countdown to a strike threat in the US East on October 1 has led cargo owners to pre-arrange freight or switch to the US West route, widening the decline in US East freight rates. The industry estimates that the second half of October will be key, with the US FMC planning to increase various port surcharges in the Eastern US and the Gulf of Mexico.
Airlines have announced 105 suspensions between September 23 and October 27, accounting for 15% of total flights. The majority of these suspensions are on the eastbound trans-Pacific route, with 64% of flights affected.
Market Outlook
The industry is holding its breath waiting for the outcome of the labor negotiations in the Eastern United States. If a strike occurs on October 1, it may coincide with the mainland’s Golden Week factory holiday, potentially limiting the impact. However, if freight rates continue to fall, shipping companies may increase the number of suspended sails.
The SCFI quoted today that the freight rate per 20-foot container from Shanghai to Europe was US$2,250, a decrease of US$342, and a weekly decrease of 13.19%. The price per 40-foot container from Shanghai to the US West was US$4,852, down US$489, or 9.16%.