U.S.-bound container volumes have been declining consecutively, while freight rates have risen for three weeks in a row. What’s behind this trend?

According to data released on April 10 by the Shanghai Shipping Exchange, the Shanghai Containerized Freight Index (SCFI) rose by 1.93% to 1890.77 points, marking the third consecutive weekly increase. The primary driver behind this upward trend is the U.S. trade lane. Specifically:

Among these, routes to Los Angeles saw a more substantial surge, climbing 9% to $2,910, while rates to New York increased by 7% to $3,671.

Freight rates are rising—could this be due to a recovery in demand for cargo volume on the U.S. routes?

However, according to market data feedback, the import volume of containers to the U.S. is actually declining due to the impact of the trade war.From April last year to February this year, the overall decline was 4.5%.Some experts estimate that the trade war has reduced U.S. import cargo volume by approximately 3.9 million TEUs.

It is projected that the total volume on the U.S. routes in the first half of this year will decrease by 1.8% year-on-year, reaching only 12.3 million TEUs. Among this, cargo volume from May to June may see some growth, but the primary reason is that during the same period last year, the tariff policy introduced by Trump on "Tax Day" led to a severe drop in the base volume for U.S. routes, which in turn makes the current figures appear elevated.

Therefore, various indicators suggest that the current surge in freight rates on the U.S. routes is not driven by demand, but rather the result of external factors. To summarize, it primarily stems from three key reasons.

Rising fuel costs.The situation in the Strait of Hormuz is unstable, pushing up oil prices. Many shipping companies have already announced emergency bunker surcharges, while trucking, rail, and last-mile delivery services have also imposed additional fees in response to rising fuel costs. These additional expenses ultimately get reflected in the final freight rates.

Shipping lines are proactively reducing capacity by cutting sailings and controlling slot allocations.Many shipping lines are implementing measures such as reducing sailing frequencies and compressing slot allocations to drive up freight rates.

April is a critical period for long-term contract negotiations on the U.S. routes.At this time every year, shipping lines take measures to stabilize or even push up freight rates, building momentum for long-term contract negotiations. This year, additional factors such as soaring oil prices and geopolitical risks have further strengthened shipping companies' resolve to raise rates, making contract negotiations tighter with less room for price concessions.

In the short term, freight rates are likely to continue rising. Industry consensus suggests that rates may increase by 7% to 10% in early April. By May, some shipping companies may further push for bunker adjustment factors and peak season surcharges. Moreover, even if cargo volume does not surge significantly, freight rates could still rise as long as costs remain high and shipping lines continue controlling capacity.

In the medium to long term, June to August marks the traditional peak season. If cargo demand picks up even moderately, a delayed round of freight rate hikes could potentially follow. In such a scenario, rates on European routes might also be driven upward.

Keep an eye on the trends in transportation costs. Based on the current market conditions, fluctuations in freight rates are not only directly tied to usual cargo volumes but are also more closely linked to operational factors on the cost and supply sides. Therefore, when assessing the direction of freight rates, it is essential to simultaneously evaluate the changing trends on the cost side.

If you have shipping plans in May or June, you may want to consider securing space in advance to avoid facing further price increases later.

Pay attention to the price differentials between the U.S. East Coast and the U.S. West Coast, and choose the appropriate shipping routes and ports accordingly.

Editor: Lily​