SCFI has fallen for three consecutive times! Tariffs war impacts the US freight rates to rise against the trend.

The Shanghai Containerized Freight Index (SCFI) has fallen for three consecutive weeks. While the US route saw a surge in freight rates despite a sharp decline in cargo volume due to the trade war, thanks to the efforts of shipping companies in reducing capacity.

According to the latest data released by the Shanghai Shipping Exchange on April 30, the SCFI index fell by 6.91 points last week to 1340.93 points, a weekly decrease of 0.51%. Among the four major ocean routes to Europe and America, freight rates on the Far East to West Coast and East Coast routes continued to rise, while those on the Europe and Mediterranean routes continued to fall.

Last week, the freight rate for Far East to West Coast increased by US \$131 to US \$2,272 per FEU, a weekly increase of 6.12%; the freight rate for Far East to East Coast increased by US \$26 to US \$3283 per FEU, a weekly increase of 0.8%; the freight rate for Far East to Europe decreased by US \$60 to US \$1200 per TEU, a weekly decrease of 4.76%; and the freight rate for Far East to the Mediterranean decreased by US \$40 to US \$2089 per TEU, a weekly decrease of 1.88%.

On the short-sea routes, the freight rate for Far East to Kansai, Japan remained unchanged at US \$316 per TEU compared to the previous week; the freight rate for Far East to Kanto, Japan remained unchanged at US \$321 per TEU; the freight rate for Far East to Southeast Asia decreased by US \$16 to US \$438 per TEU; and the freight rate for Far East to South Korea increased by US \$1 to US \$147 per TEU.

Industry insiders said that the decline in the SCFI index last week was mainly due to the continued decline in freight rates on the Europe route. On the other hand, although the volume of goods on the US route has dropped significantly, shipping companies have relied on the cancellation of a large number of routes or voyages to support the counter-cyclical rise in spot freight rates, with the West Coast and East Coast routes respectively maintaining the US \$2000 and US \$3000 levels to ensure that new annual contract rates are higher than last year.

The Port of Long Beach estimates that the number of ships arriving from May 4 to 10 will be significantly lower than the same period last year, by 44%. According to Sea-Intelligence data, 10 voyages were cancelled on the Asia-Pacific to US West Coast route last week, accounting for 28% of weekly capacity, and cancellations this week are even higher, at 42%; 25% of capacity is expected to be cancelled from May 12 to 18.

In addition, the latest report from Drewry also shows that 72 voyages will be cancelled from now until the end of May, with 56% concentrated on the trans-Pacific routes.

In order to cope with the reduction in cargo volume caused by the trade war, shipping companies have transferred some US route vessels to the European market. Market sources said that the Ocean Alliance has transferred at least 5 vessels, approximately 66,500 TEU of capacity, from the US route to the Europe route, making it difficult for freight rates on the Europe route to stop falling and falling below contract prices. The planned price increase on May 1 also came to nothing.

Looking ahead, in the face of escalating tariff barriers, US import businesses are taking self-help measures for survival. A recent CNBC survey of 120 businesses showed that 89% prioritized order cancellations, 61% switched to sourcing from low-tariff origins such as Southeast Asia, and 61% announced price increases. It is noteworthy that 75% of respondents expect tariff costs to be passed on to consumers, leading to a decline in US consumer purchasing power. In addition, 81% of businesses said that if they set up factories in the US, they would replace manpower with industrial robots, reflecting the dual challenges of cost and technology in supply chain restructuring.

Industry insiders point out that with the absence of the traditional peak shipping season in spring and summer, the cold winter for trans-Pacific routes is expected to continue until the second half of 2025.