Freight rates have risen for ten consecutive times! The SCFI index broke through 3300 points and reached a new 22 month high

The Red Sea crisis is still unresolved, and labor negotiations with the East Coast Workers Association have brought more variables to the consolidation market. The Shanghai Export Container Freight Index (SCFI) has surged continuously to break through 3300 points.

According to the latest data released by the Shanghai Airlines Exchange on June 14th, the SCFI index rose by 194.35 points last week to 3379.22 points, reaching a new high since late August 2022. It has been rising for ten consecutive weeks, with a weekly increase of 6.1%. The freight rates of the four major ocean routes have continued to rise, with the US route experiencing a significant increase.

Last week, the freight rate per FEU for the Far East to the West Coast increased by $697 to $6906, a weekly increase of 11.23%; The freight rate per FEU on the Far East to the US East route has increased by $546 to $7993, a weekly increase of 7.33%; The freight rate per TEU for the Far East to Europe line has increased by $230 to $4179, a weekly increase of 5.82%; The freight rate per TEU for the Far East to Mediterranean line has increased by $64 to $4848, a weekly increase of 1.34%.

On the offshore route, the freight rate per TEU from the Far East to Kansai, Japan remained unchanged from the previous week at $293; The freight rate per TEU from Far East to Kanto, Japan remained unchanged from the previous week at $299; The freight rate per TEU from the Far East to Southeast Asia has increased by $52 to $679 compared to the previous week; The freight rate per TEU from the Far East to South Korea remained unchanged from the previous week at $163.

Industry analysis points out that labor negotiations on the east coast of Canada and the United States are about to begin, adding uncertainty to North American ports and domestic railway transportation in the second half of the year. Under the chain reaction of multiple variables, it is exacerbating global supply chain tension and short-term freight rates are on the rise.

The main topics of negotiations for East Coast workers in the United States are wages and opposition to port equipment automation. The International Dockworkers Association (ILA) of the United States has suspended labor contract negotiations with the United States Maritime Union (USMX) this week, citing dissatisfaction with Maersk's implementation of automation in some ports and affecting worker rights. This has led to a significant increase in the likelihood of strikes by East Coast and Gulf Coast workers in the third quarter. Once the dock workers strike, it will have a serious impact on shipping and logistics, causing supply chain disruptions.

In addition, in Europe, port workers in ports such as Marseille in France and Hamburg in Germany are demanding salary increases or allowances. They have launched warning strikes in June, with work stoppages ranging from several hours to 24 hours. In addition, with full cargo, congestion, and shortage of containers continuing, freight rates will continue to rise in the short term, and there may even be sky high prices.

Recently, there was news that the situation in the Middle East is expected to ease, but the latest news from foreign media shows that Lebanon is throwing rockets at Israel recklessly, and Israeli soldiers are using catapults to launch fireballs near the Lebanese border,

Industry insiders point out that it is difficult to predict when the situation in the Middle East will ease. Even if the Gaza ceasefire agreement is signed, the normal operation of the Red Sea route cannot be immediately restored, and there is no obvious reason for the freight rate to become pessimistic in the future.

At present, the demand for sea transportation continues to be at a high level, and the European and American routes are fully loaded until mid July. Coupled with concerns about strikes, psychological factors may push up the demand for short-term transportation. However, due to elections in many European and American countries this year, especially in the US presidential election, it is expected that governments around the world will intervene to reduce or avoid the impact of strikes.