The composite index of the Shanghai Containerized Freight Index (SCFI) jumped to its highest level since September 2012, reaching 1,263.26 on 28 August, and representing a 54.4% increase from 24 April when the SCFI was at its lowest point this year.
The Shanghai to US coasts routes are behind the biggest increase in freight rates. From late April, rates to the US West Coast are up 143.4% to USD 3,639 per FEU, the highest level since at least 2010. Spot rates into the US East Coast are up 60.6% from 24 April at USD 4,207 per FEU. Freight rates into Europe have also risen, although at a lower rate: up 36.7% from April (USD 1,029 per TEU).
“This week, we have seen indications that rates have continued rising on routes from Shanghai to both US coasts, with East Coast rates rising more than West Coast rates,” says Peter Sand, BIMCO’s Chief Shipping Analyst.
At the height of the COVID-19 crisis, carriers blanked a large number of sailings, reducing capacity and thereby supporting freight rates. However, as many countries have started opening up, most sailings have been reinstated and extra sailings added. In fact, Alphaliner estimates that weekly capacity between Asia and North America could exceed 500,000 TEU for the first time ever in September.
As witnessed by the soaring spot freight rates, the rise in capacity has not yet had negative effects. However, as the world now faces recession and reduced demand, BIMCO expects that freight rates will ease on the other side of Golden Week, unless carriers re-commit to lowering capacity.
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