"First class is in high demand" reappears! Strong demand for multiple routes in freight transportation, industry insiders predict that the peak in shipments on the Europe-America route may last for 1-2 months.

"" "" "" ...... Financial Association journalists learned from freight forwarders, shipping companies, and other sources that in recent times, many shipping routes in the shipping market have experienced a shortage of container space, with reasons including geopolitical issues and increased demand for local goods. As for the future trends of the European and American routes, many industry insiders have indicated that in the short term, both freight volumes and prices are not expected to decrease and may continue for 1-2 months, but after July, it is anticipated that there will be a divergence in the demand for freight on the European and American routes. As of the closing of May 22, the European (EU line) Shipping Futures Main Contract reported 3000 points, a 3.39% increase month-on-month, with the EC2607 contract increasing by over 5%. The EC2606, EC2608, and EC2609 contracts all saw increases of over 3%. Strong freight demand leads to shortage of cabin space on multiple routes In recent days, freight forwarding companies responsible for operations on routes such as Europe, North America, the Middle East, Southeast Asia, and the Red Sea have confirmed to Financial Association journalists that there have been incidents of cabin shortages. "In May, all European routes are fully booked, and booking volumes for June are currently looking good. It is expected that the first half of June will still see inadequate supply, but the market response in the second half of June still needs attention." A logistics provider told Financial Association journalists that due to the situation in the Middle East, cargo destined for the Middle East is being diverted to the Red Sea port of Jeddah or to related regions such as Turkey, which has also led to an increase in freight volume on European routes. Experts on the European region of the Shipping Whereabouts route also told Financial Association journalists that due to concerns among the European population about the oil problem caused by the war in the Middle East, there has been a significant increase in demand for electrical products, especially photovoltaics and other new energy products. The export volume of new energy vehicles has increased significantly. In situations where bulk cargo ships are unable to meet the capacity, there is a significant demand for container ships. At the same time, the aforementioned European route experts stated that in the East China region, 7-8 large ship voyages were canceled from late April to mid-May, leading to a reduction in capacity and insufficient capacity. With the increase in the aforementioned freight volume, coupled with the squeeze on new energy products, there has been a clear lack of cabin space, which has driven up prices. In terms of price increases, Europe has seen a steady increase in prices, relatively following seasonal trends, but the Red Sea and Mediterranean regions have been significantly impacted by the situation in the Middle East, leading to a very large increase in prices. As for the American routes, in addition to confirmation of cabin shortages from many freight forwarding company personnel, Financial Association journalists also confirmed from a major shipping company that there has indeed been a shortage of cabin space. However, the reasons for the cabin shortage on American routes are slightly different from those on European routes. "Looking back at previous years, traditional shipments in the months of May to September are relatively light; e-commerce goods peak in April in the first half of the year and in November in the second half, with other months showing a flat trend. The current cabin shortage on American routes is mainly due to strong demand on the demand side." Gao Guangyu, co-founder of Union Express Group, told Financial Association journalists that as the American Independence Day approaches and the Copa America kicks off in the US, local demand for goods is strong, leading traditional large traders and purchasers to increase their stockpiling intentions. Furthermore, Gao Guangyu added that in the context of stabilizing Sino-American political relations, combined with the arrival of American tax refunds, the tariffs from exports from China are comparable to those from exports from Southeast Asian countries. In addition, China's supply chain performance is more stable, which has increased the willingness of purchasers to ship from China, leading to goods originally exported from Southeast Asia being switched to domestic production. Looking at the timeline, experts on the Shipping Whereabouts USA-Canada route revealed that the cabin shortage in the East China region can be traced back to the end of April, and as of now, all cabin spaces at all domestic ports are abnormally tight, with some ports experiencing "a shortage of cabins." In terms of goods sent from the USA-Canada route on the Shipping Whereabouts, the highest proportion is e-commerce goods, followed by offline supermarket goods. According to feedback from frontline salespeople, the market for the American route is showing signs of recovery. As freight demand rises, shipping prices continue to climb. Financial Association journalists learned from freight forwarders that prices on the Red Sea route have increased by forty to fifty percent compared to the same period last month. Due to the impact of the war in the Middle East on the Red Sea region, the Mediterranean region has seen a significant increase in prices, with the East Mediterranean route, for example, increasing from $3000/FEU in late April to $5500/FEU. Looking at spot freight rates, according to data provided by Polar Feather Technology, as of May 22, the lowest price on the Shanghai to Los Angeles/Long Beach route in the American route was $3332/FEU, a 21.3% increase from the lowest price of $2747/FEU that could be found on the same route in the previous month. On the European route, Polar Feather Technology data shows that, on May 22, the lowest price on the Shanghai to Rotterdam route was $2800/FEU for the day (Maersk), a 24.4% increase compared to the lowest price from the previous month. On May 22, the NCFI index updated by the Ningbo Shipping Exchange showed that the price index for the European route was 1329.5 points, a 3.6% increase compared to the previous week; The East and West Mediterranean routes saw increases of 2.2% and 1.5% respectively. The price index for the East American route was 1551.9 points, a 9.0% increase from last week; the price index for the West American route was 1936.8 points, a 7.2% increase from last week. In addition, the Indo-Pakistani route saw a 45.4% increase due to a reduction in capacity. Recently, shipping companies have been announcing price increases for June. For example, Hapag-Lloyd announced that the FAK rate from the Far East to Northern Europe will be raised to $4300/FEU, effective from June 1; Maersk's FAK rate from major ports in Asia to Rotterdam has been raised to $3800/FEU. DAF Feeder Shipping also announced on May 21 that it will start charging Peak Season Surcharge (PSS) from Asia to Northern Europe from June 1 until further notice, at $500/TEU. Not long ago, it had just announced a price increase from June 1 to 14 for the route from Asia to Northern Europe to $4700/FEU. "We have also recently received a notice from the American route shipowners about a price increase of $1500/FEU starting from June 1. After the increase, the price on the West American route will reach $4800/FEU, and the price on the East American route will reach between $5800/FEU and $6000/FEU. However, the final implementation of the increase still depends on market feedback, mainly because some low-value goods may not be able to bear such high shipping costs, leading to the possibility of delaying shipments, and the increase may be slightly adjusted downward." the aforementioned Shipping Whereabouts expert on the USA-Canada route told a Financial Association journalist. It is expected that this peak period will continue for 1-2 months and that the European and American markets may experience divergence in the second half of the year. As for the continuation of this cabin shortage situation, based on the feedback from many industry insiders, it is generally believed that the peak will last for about 1-2 months. The situation on the European and American routes is expected to evolve differently in the second half of the year. Furthermore, the aforementioned Shipping Whereabouts expert on the USA-Canada route added that given the current market conditions for capacity, this situation of high prices may continue until the end of June. The duration of this situation will also depend on the input of capacity by shipping companies in response to high market prices. If shipping companies put more capacity into the market under the backdrop of high prices, it will affect the price fluctuation. Regarding whether the traditional peak season of the American route from July to September will be affected by this current situation, the USA-Canada route expert revealed that based on current internal company data, there is still expected to be strong performance at that time, with supporting freight volumes. For the European route, an analyst from an institution told Financial Association journalists that prices of spot goods on the European route are expected to rise until early July, with a trend of price increases in the second half of June, but the actual situation will depend on realization. The aforementioned expert on the European route from the Shipping Whereabouts also stated that it is expected that this peak period will last for 1-2 months. However, there are concerns about the European route market in the second half of the year. This is mainly because there will be a significant increase in capacity in the second half of the year, with shipping companies launching new ships and expanding capacity. Additionally, the overall economic situation in Europe is not good, and after this peak shipping period, demand is expected to decrease. This article is a repost from Financial Association, GMTEight Editor: Chen Wenfang.