Freight Rates Plummet Amid Weak Demand
Spot market freight rates in container shipping are dropping sharply, leading to low capacity utilization and price pressure.
Cargo volumes are recovering slowly after Chinese New Year, yet carriers have significantly increased capacity.
The Shanghai Containerized Freight Index (SCFI) fell 8% to 1,319 points, now 25% lower than a year ago. Even Houthi rebel threats in the Red Sea have not lifted market sentiment, as major lines have avoided the area for over a year.
Rates on key routes from Shanghai to North America and Europe saw the steepest declines. SCFI shows rates on the Shanghai/North Europe route dropped 15% to $1,342/TEU, while shipments to the US West Coast fell 14% to $1,965/FEU.
It remains unclear if seasonal trends or US-imposed tariffs are slowing demand. Importers are cautious, fearing shipments from the Far East could face tariffs in April. The Trump administration is still threatening a 60% tariff on Chinese goods.
Some carriers, including Maersk, plan to increase rates from April, but this depends on better capacity utilization. Current estimates suggest Far East departures are just over 90% full.
Positive Trend in Bulk Shipping
Dry bulk shipping saw a strong week, despite escalating tariffs on steel, aluminum, and agricultural goods. The Baltic Dry Index rose 269 points to 1,669, driven by demand in Panamax and Capesize segments.
Capesize rates climbed 18% to $23,700/day, with increased tonnage inquiries in Brazil and West Africa. Panamax rates surged 37% to $12,300/day due to strong demand for grain (South America) and coal (Southeast Asia).
Tanker rate fluctuations were limited. VLCCs rose slightly by 3% to $43,700/day, while Suezmaxes and Aframaxes gained 6% and 2% to $41,200 and $27,800/day, respectively, according to Clarksons.
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