Fares on Asia-to-U.S. routes surged, leading domestic shipping stocks to rise during the day on the 2nd.
Shares of Korea's largest shipping company, HMM, traded at 22,500 won on the KOSPI market at 11:24 a.m. that day, up 5.63% (1,200 won) from the previous trading day.
At the same time, stocks of STX Green Logis, Panstar Enterprise, Heung-A Shipping, KSS LINE, Pan Ocean, and Korea Line Corporation also traded at higher prices compared to the previous trading day.
The surge in fares appears to have stimulated investor sentiment. The Shanghai Container Freight Index (SCFI) rose by 30.7% in just a week as of the 30th of last month, with the Asia-to-U.S. West Coast and Asia-to-U.S. East Coast rates surging by 57.9% and 45.7%, respectively.
The SCFI serves as a benchmark for container shipping rates worldwide. As the SCFI rises, shipping companies can charge higher fares and increase profitability.
However, there are analyses suggesting that it might be difficult to view this fare surge optimistically. The volatility has increased, but it does not necessarily indicate a shift to an upward trend. Following the SCFI announcement, shipping stocks in European markets actually saw declines.
Kang Seong-jin, an analyst at KB Securities, noted that "for container shipping volume forecasts to improve, the conflict must end, and a free trade regime similar to the past must be restored, but given the current U.S. trade pressure on China, this seems difficult to expect."
Kang continued, saying that "the fact that supply is increasing much faster than demand is also a challenge facing the container shipping market," adding, "As of early last month, the capacity of container ships rose by 8.6% compared to the same period last year."