Many shipping companies plan to raise prices sharply due to a possible strike in the East, but Maersk and Hapag-Lloyd have not followed up, and the industry is not optimistic about it. Affected by the imposition of tariffs and the risk of strikes, US importers have advanced purchases and the peak season has ended early. The industry believes that large price increases are unrealistic and expects only small increases or the use of fewer flights to raise prices. The impact of the strike on freight rates depends on the length of time, and some goods may be rerouted to the West and then transferred to the East.

Due to a possible strike on the East Coast of the United States on October 1, a number of shipping companies have announced plans for significant changes in freight rates for U.S. routes in advance. Non-alliance shipping companies claim that each TEU will increase by $4,000, while some Asian alliance shipping companies plan to increase by $2,000 on October 1, and put forward an additional $2,000 on October 15.

However, it is worth noting that the two giants of Maersk and Hapag-Lloyd have not put forward any price increase plans so far, and the industry executives are generally not optimistic about this round of big price increases.

The person in charge of a large freight forwarding company pointed out that affected by the increase in tariffs in the United States and the risk of strikes at East Coast ports, American importers have increased procurement and inventory replenishment efforts in advance, resulting in the traditional peak season coming to an end in advance.

Given current market conditions, there are many challenges to using the threat of strikes to significantly increase rates. Specifically, shipments shipped after October 1 have arrived in the East of the United States for nearly November, and even if there is a strike or work slowdown, it may have subsided by then. In addition, the fourth quarter is the traditional low season, and freight demand has decreased significantly, further weakening the feasibility of price increases.

Industry analysts believe that shipping companies may be able to take advantage of the strike to raise prices by $300 to $500 per TEU, or to increase freight rates by reducing flights, but previously announced steep increases of $2,000 to $4,000 are unrealistic.

In addition, the fourth quarter of the seasonal decline in cargo demand, capacity supply increased, freight rates are more likely to fall than rise. With regard to the strike of dockworkers in the East of the United States, the possibility of government intervention in mediation should not be ignored given the proximity of the U.S. presidential election. If the strike continues, although some shipping companies plan to increase again on October 15, Maersk and Hapag-Lloyd remain on the sidelines and have not followed up on price increases.

In response to the possible impact of the strike, some goods may be imported from the United States and then transferred to the United States by rail to the East, which may help support the United States and West freight rates. The actual impact of the strike on freight rates will depend on the length of the strike. European shipping company executives revealed that Maersk and Hapag-Lloyd prefer to maintain the current freight rate stability, only when the strike actually occurred to consider a small increase. Asian shipping company executives believe that the price increase of 300 to 500 US dollars per TEU is more reasonable, but considering the market supply and demand and competition from low-priced non-alliance ships, the room for price increases is limited and mostly short-term phenomenon.

According to the latest export Container Freight Index (SCFI) data released by the Shanghai Shipping Exchange, the freight rate of the US line reached its peak on July 5 this year, with the freight rate of the US-West line reaching $8,103 per TEU. However, by September 13 (last Friday), the freight rate of the route has dropped significantly to 5,494 US dollars, a cumulative decline of 2,609 US dollars, a decrease of 32.20%. Similarly, the U.S.-East route freight rate also fell from a high of $9,945 to $6,838, a decrease of $3,107, or 31.24%.

The reason why the actual market freight rate is lower than the level indicated by the index is mainly due to the pricing strategy adopted by the shipping companies. Shipping companies usually match long-term contract rates (long-term contract rates) with spot market rates (spot rates) to balance supply and demand. In addition, in order to attract large customers and maintain market share, shipping companies have also offered preferential measures, including special rates and special flights such as overtime ships, which have further depressed the actual rates charged. Despite the significant decline in freight rates, current rates are still many times higher than cost.

Freight rates fell for four consecutive weeks, the European line plunged nearly 20% a week, and the United States still has room to lower

Shipping market freight continued to experience adjustments, last week the latest release of the Shanghai Shipping Exchange export container freight index (SCFI) fell 215.63 points to 2510.95 points, a weekly decline of 7.9%, has been four consecutive weeks of decline. Among the major routes, European routes saw the most significant drop of nearly 18%; Mediterranean routes followed with a drop of nearly 12 per cent; The U.S.-East route also recorded a decline of nearly 9 percent.

Specific data show that last Thursday, major route freight rates continued to show a downward trend:
Euro fell $618, or 17.86%, to $2,841 per TEU.
Mediterranean fell $458, or 11.98%, to $3,365 /TEU.
U.S. / Western freight fell $111, or 1.98%, to $5,494 /FEU.
American East fell $673, or 8.96%, to $6,838 /FEU.

Industry insiders said that as Christmas-related goods have been shipped ahead of schedule, freight rates are expected to continue to fall until the end of September. In response to changes in the market, shipping companies plan to start scheduling empty sailings from October. In addition, Mediterranean routes are expected to decline faster than European routes.

For the US-East route, industry insiders believe that there is still room for further declines in freight rates, because the preferential prices launched last week have not yet been fully reflected in the market. At the same time, by the eleven golden Week holiday and the expected impact of the possible strike of the United States dock workers, the shippers generally hold a conservative wait-and-see attitude, and the willingness to ship is not strong. That could lead to emergency orders being diverted to the West American route, slowing the decline there.