Freight Rates Edge Down in First Week of the New Year: SCFI Ends Three-Week Rally with a Mild Drop

In the first working week of the new year, the Shanghai Containerized Freight Index (SCFI) ended its three-week upward streak and edged down slightly.

According to the latest data released by the Shanghai Shipping Exchange on January 9, the SCFI fell 8.93 points to 1,647.39 points in the previous week, a weekly decline of 0.53%. While freight rates on major ocean routes all rose, the overall index turned lower again, dragged down by sharp drops on secondary trunk routes such as the South America route (Santos) and Southeast Asia route (Singapore).

Last week, the freight rate for the Far East - US West Coast route increased by $30 to $2,218 per FEU, a weekly rise of 1.37%; the rate for the Far East - US East Coast route climbed $95 to $3,128 per FEU, a weekly gain of 3.13%; the rate for the Far East - Europe route went up $29 to $1,719 per TEU, a weekly increase of 1.72%; and the rate for the Far East - Mediterranean route rose $89 to $3,232 per TEU, a weekly surge of 2.83%.

For short-sea routes, the freight rate for the Far East - Kansai (Japan) route remained unchanged at $312 per TEU from the previous week; the rate for the Far East - Kanto (Japan) route stayed flat at $321 per TEU; the rate for the Far East - Southeast Asia route dropped $24 to $518 per TEU; and the rate for the Far East - South Korea route held steady at $138 per TEU.

• The expected easing of the Red Sea situation, with some container shipping companies beginning to assess and attempt a return to the original routes, leading to a slight increase in available market capacity.

• Continuous delivery of new vessels, with overall capacity growth outpacing the actual growth in cargo volumes. Even though there is some pre-holiday cargo pull demand ahead of the Spring Festival, it will be difficult to fully absorb the capacity growth in the short term, making price fluctuations a normal market phenomenon.

Overall, current freight rates remain above the cost line. Container shipping companies plan to attempt a new round of rate adjustments ahead of the Spring Festival holiday. However, with the overall loose capacity supply, there are uncertainties as to whether the rate hikes can be fully implemented.