This round of price increases in container freight was mainly affected by a number of factors. First, the Red Sea crisis led to capacity constraints. Secondly, the shortage of containers also fuelled the rise in pool prices. In addition, with the recovery of demand on all continents, the demand for cargo transport has increased, which also has a positive impact on the price of container transport.
According to the latest issue of Shanghai Container Freight Index (SCFI), the four major routes rose across the board, Europe rose slightly lower, the U.S. line rose more significantly, the most ferocious increase in South America, South Africa and West Africa routes, and South American routes is a few weeks in a row rose sharply. It is worth noting that, Shanghai to South America, the basic port market tariffs have doubled over the beginning of the year (January 5), up 130.47%.
Recently, the global shipping market has seen a series of significant changes, especially in the South American route. A number of shipping companies, including Duffy, COSCO Sea, etc. are increasing capacity investment in the South American market, the opening of new South American routes. This initiative is mainly in response to the policy of South American countries such as Brazil to increase import duties on electric cars and solar panels and other commodities. As tariffs rise, many customers want to be able to ship to South America first to avoid the increased cost of tariffs.
According to the website of China's Ministry of Commerce, Brazil has decided to impose a uniform MERCOSUR tariff of 10.8 per cent on photovoltaic (PV) modules, but in order for the market to adapt to this new regulation, the relevant agencies have set a duty-free quota that decreases every year until 2027. Since 99 per cent of Brazil's solar panels come from China, the sooner Chinese PV companies export to Brazil, the less tariffs they will face.
In terms of electric vehicles, Brazil is also planning to raise import tariffs on electric vehicles in a gradual manner, with the rate rising to 35 percent by 2026, while the zero-tariff import quota will fall each year until it is cancelled in 2026. This policy change has led Chinese automakers to increase their export efforts.
Due to the tight capacity of ro-ro vessels, containerised shipping has become one of the alternatives for car transport. Recently, the shipments of some car companies such as BYD have increased dramatically, resulting in some of the freight forwarders' slots being taken up by these car companies. In addition, due to West Africa's capacity has been deployed to South America, West Africa route tariffs are also rising.
According to the Shanghai Shipping Exchange data, May 17, China's export container freight index, South American routes, East and West Africa routes, South Africa routes, the rate of increase are higher, respectively, reached 15.9%, 14.1%, 11.7%. Especially in the African route, individual points of freight has risen to 10,000 U.S. dollars a container, while in the off-season, this cost is only 2,000-3,000 U.S. dollars. The freight rate of the South American route has also risen from the usual US$2,000-3,000 to about US$7,000 now.
Maritime Trade Maritime Network (MTMN), which specialises in international shipping maritime issues, reported that although there is still a shortage of freight capacity between Europe and Asia as of May this year, equivalent to 36 vessels, new deliveries so far this year have added 1.14 million TEUs of capacity to the market, and it is expected that this will continue to increase by 2 million TEUs over the course of the year. million TEUs. If the Red Sea shipping can return to normal, will further release the container shipping capacity.
Ramon Fernandez, chief financial officer of France's Duffy Group, recently said that in view of the scale of the global shipping fleet may continue to expand in the future, international container shipping rates are expected to fall in the second half of this year. It believes that the increase in capacity will make capacity supply exceeds demand, even if the cargo ships continue to round the Cape of Good Hope, it is difficult to completely consume the new capacity.
Analysts believe that, despite the risk of overcapacity, but India to Europe and Asia to the U.S. East Coast of the demand for capacity is still a further increase in space, which will help share part of the excess capacity supply. In addition, it is expected that during this year's peak international freight season (August to October), the market demand for capacity will be extremely strong, which may alleviate the problem of excess capacity to some extent.
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