Affected by multiple factors, the trans Pacific route may reach supply-demand balance in July, with freight rates soaring by nearly 30%.

International freight online platform Freightos recently stated that due to some shipping companies canceling some voyages on the trans Pacific route and shippers shipping before possible additional tariffs take effect, it is expected that the supply and demand level of the trans Pacific route will remain basically unchanged in July, and freight rates are expected to increase significantly.

Foreign media reports

According to the Freightos Baltic Indicators (FBX) jointly launched by Freightos and the Baltic Shipping Exchange, the freight rate from China to the West Coast of the United States has remained stable at $1387/FEU over the past week. Freightos predicts that freight rates are likely to increase significantly by $300/FEU to $400/FEU on July 1st, with a rise of 21% to 29%.

In addition, the freight rate from China to the East Coast of the United States is currently stable at $2636/FEU, and it is expected to rise in July as well.

According to Eytan Buchman, Chief Marketing Officer of Freightos, all signs indicate that the trans Pacific market will see an increase next week.

The cancellation of voyages and early shipments have driven up freight rates, "Buchman said." Usually, shipping companies introduce peak season surcharges (PSS) in July. Although there is still about a week until July, some shipping companies have notified customers to increase freight rates, ranging from $300/FEU to $400/FEU, and may be even higher

Freightos added that the freight rate from China to Europe is currently stable at $1289/FEU, but 16% lower than the same period last year and 37% lower than the same period in 2017.

In recent times, many shipping companies have indeed adjusted their capacity by suspending some voyages on trans Pacific routes.

Dongfang Overseas has issued notices on May 23 and June 19, stating that due to the expected decline in demand for freight services, some flights in the market have been cancelled, involving PCS1, PNW2, PNW1, and ECC2 routes, with multiple flights involving July.

APL also announced on June 21st the recent suspension plan for the trans Pacific route, and multiple voyages on the Wax route have been cancelled.

In terms of freight, some shipping companies have notified the imposition of peak season surcharges.

Starting from July 15th, Wanhai Airlines will charge a peak season surcharge for the US West route in the trans Pacific market, ranging from $40 to $630 depending on the container type.

Starting from August 1st, Hapag Lloyd will charge a peak season surcharge from East Asia to the United States and Canada, with a standard of $480/TEU and $600/FEU.

Regarding the future trend of the trans Pacific market, Freightos also analyzed that if the leaders of China and the United States reach some kind of consensus at the G20 summit, the trans Pacific route market may still undergo changes.

Since the beginning of this year, trans Pacific freight rates have shown a roller coaster trend.

The Cross Pacific Freight Index released by Ningbo Shipping Exchange

According to data released by the Ningbo Shipping Exchange, in October 2018, the Ningbo West Coast freight rate index was 1555.18 points, and the East Coast route was 1179.1 points, which is the stage when shippers concentrate on shipping.

But by the end of March this year, the freight rate index for the US West Coast route had fallen to half, dropping to 786.68 points.

Starting from May 10th, the tariffs imposed by the United States on $200 billion worth of goods imported from China have increased from 10% to 25%. As a result, the freight rates in the Asian to US airline market have continued to decline.

Source: China Aviation Weekly