SCFI ends its three-week losing streak! Signs of freight rates hitting bottom are emerging.

The Shanghai Containerized Freight Index (SCFI) ended its three-week decline and rebounded above the 1,400-point mark, signaling that freight rates may be reaching a bottom.

According to the latest data released by the Shanghai Shipping Exchange on November 28, last week the Shanghai Container Freight Index (SCFI) rose by 9.57 points to 1,403.13, representing a weekly increase of 0.68%. Among the four major overseas routes, while freight rates on the West Coast of the U.S. route declined, freight rates on the other three major overseas routes all stopped falling and began to rebound.

Last week, the freight rate for a 20-foot equivalent unit (FEU) on the Far East-to-West Coast U.S. route fell by $13 to $1,632, representing a weekly decline of 0.79%; the freight rate for a FEU on the Far East-to-East Coast U.S. route rose by $44 to $2,428, marking a weekly increase of 1.85%; the freight rate for a 20-foot equivalent unit (TEU) on the Far East-to-Europe route increased by $37 to $1,404, reflecting a weekly rise of 2.71%; and the freight rate for a TEU on the Far East-to-Mediterranean route climbed by $177 from the previous week to $2,232, with a weekly increase of 8.61%.

On the near-ocean routes, the freight rate per TEU from the Far East to Kansai, Japan, remained unchanged from the previous week at USD 312; the freight rate per TEU from the Far East to Kanto, Japan, also remained unchanged at USD 321; the freight rate per TEU from the Far East to Southeast Asia stayed flat at USD 540 compared to the previous week; and the freight rate per TEU from the Far East to South Korea fell by USD 2 from the previous week to USD 143.

Industry insiders say that as the Christmas and New Year holidays approach, overall market shipping momentum is relatively weak. December marks the start of the off-season for long-haul routes, while demand in the short-haul routes enters its peak season. The Asia region benefits from a surge in shipments ahead of the Spring Festival; as demand on short-haul routes remains robust, it is expected to offset the pressure from declining cargo volumes on North American and European routes.

It is expected that, in the short term, freight rates on North American routes may only experience a deep drop followed by a slight rebound. However, around the end of December, there could be an opportunity for a more noticeable increase, driven by pre-Spring Festival restocking. As for European routes, due to differences in service quality, various shipping alliances have begun widening price gaps, with per-FEU rate differentials ranging from approximately $300 to $500. Currently, the OCEAN Alliance maintains firm pricing on its European routes and plans to further raise rates, while the Premier Alliance, concerned about losing cargo, is holding steady and refraining from raising prices for now.

Industry estimates suggest that shipments from Asia and stockpiling in Europe and the U.S. will occur in mid-to-late December and before the Spring Festival next January. If shipping volumes are strong enough, freight rates could genuinely bottom out and rebound by then.