Recently, the shipping market has ushered in an important turn point. Shipping prices, which have been rising since April, began to fall significantly in mid-July. This change has attracted wide attention and provides us with an opportunity to analyze the dynamics of the shipping market deeply.
The reason and impact of the price decline
The fall in shipping prices is not accidental, but the result of multiple factors. First, high freight rates attract a large amount of new transport capacity, leading to a gradual balance between supply and demand. Second, freight demand with the summer vacation season in Europe and other regions has fallen seasonally. In addition, the shipment peak due to tariff policy and other factors in the early stage has passed, and the market demand began to stabilize.
Combined of these factors, the freight rates of many major routes have been reduced to varying degrees. Take the US route for example. The data on August 2 showed that the market reference price for standard containers from Tianjin to America was $6,972.11, down nearly 20 percent from its peak in early July. The price of the Eastern route in the United States fell from breaking $10,000 to $9797.67, falling below the 10,000 yuan mark.
Coping strategies for the shipping companies
In the face of the market changes, the major shipping companies have taken the corresponding measures. The shipping companies, which originally planned to announce the price increase in July, not only cancelled the price increase plan, but also lowered it to varying degrees. South Korea's Sunro merchant ship took the lead in cutting the rate by $600, and companies such as COSCO Shipping and Japan Marine Network also cut the rate by $200 to $300. Some companies have even offered preferential prices of $7,500 for specific flights to counter the fierce market competition.
Future direction of the shipping market
Despite the fall in shipping prices, prices will remain high in the short term. According to a survey by the Shanghai International Shipping Research Center, 57.89 percent of container carriers expect freight rates to fall back to normal levels in the first quarter of 2025. This means that the shipping market could experience a slow correction in the next year and a half.
It's worth noting that, unlike the sharp correction in 2017-2019, this price correction is likely to be relatively mild. This is mainly because of the global economic recovery and supply chain restructuring and other factors, will still provide some support for shipping demand. At the same time, the major shipping companies are also actively adjusting their strategies to maintain the relative stability of the market.
Overall, the shipping market is undergoing a transition from short supply to a supply and demand balance. This process may last for some time, but will ultimately benefit the long-term health of the shipping market. For related enterprises, paying close attention to market dynamics and flexibly adjusting business strategies will be an important topic in the future.
(Financial Circle)
