The tariff dispute between the United States and China quieted down, and the push demand (demand to ship goods before tariffs are imposed) decreased, resulting in a significant drop in maritime freight rates heading to the United States from Asia. The expense burden for export corporations has decreased, but shipping companies that just started services on U.S. routes find themselves in a difficult situation. HMM and SM Line also have a high revenue ratio from U.S. routes.
According to the shipping industry on the 25th, the freight rate from Shanghai, China, to the U.S. West Coast (the western coast) was $2,772 per 1 FEU (one 40ft container) as of the 20th, a decrease of 33% compared to the previous week. The freight rate for the U.S. routes also dropped by 21% during the same period to $5,352 per 1 FEU. The Shanghai Containerized Freight Index (SCFI) also fell by 10% to 1,869.59.
The reason for the decline in U.S. route freight rates is that the push demand has decreased and smaller shipping companies are expanding services, increasing supply. According to global shipping analytics firm Sea-Intelligence, the capacity that shipping companies plan to deploy on the Asia-U.S. West Coast route in June and July is expected to increase by 397,000 TEU (about 30%) compared to the forecasted capacity on the 9th of last month.
In Korea, Korea Marine Transport resumed U.S. route services for the first time in 40 years starting last month, and Sinokor Merchant Marine established a route to Mexico, marking its first foray into long-distance routes. The freight rate to Mexico, which is often cited as a bypass for U.S. exports, is significantly affected by U.S. routes.
Although supply has increased, demand has not kept pace, leading to a decline in freight rates. The National Retail Federation projected that July import volumes would fall by 8.2% year-on-year to 2.13 million TEU.
There are forecasts in the industry that shipping companies that have entered long-distance routes may face losses. A shipping industry official noted, "The smaller vessels deployed on long-distance routes are less profitable than larger ships, so if the freight rates remain at their current levels, there is a possibility of incurring losses."