In August, which should have entered the traditional peak season for exports, the export shipping market has emerged from a polarized trend, no longer following the pattern of a general rise or collective decline in the past.
The ongoing escalation of geopolitical conflicts in the Middle East has pushed freight rates on the Persian Gulf and Red Sea routes to new highs; On the other hand, major air routes such as the West Coast, East Coast, Europe, and Mediterranean have collectively fallen under pressure due to the ebb of rush dividends and the recovery of transportation capacity supply.
Strong against the trend: Persian Gulf/Red Sea route
August Trend Prediction: Overall, it is easy to rise but difficult to fall, maintaining a high upward trend, with a more significant increase in the red ocean direction.
The uncertainty of Middle Eastern navigation is the biggest variable for this route. A large number of ship owners choose to detour around the Cape of Good Hope, resulting in longer sailing cycles and decreased ship turnover efficiency, which continues to raise the operating costs of shipping companies; Major shipping companies have gradually added and increased various surcharges, further raising the comprehensive logistics costs of shippers.
Maersk has issued a price adjustment notice, imposing a new peak season surcharge (PSS) on goods from the Far East to Saudi Arabia starting from August 10th (based on PCD pricing date/actual shipment date) - $1000 per box for 20 foot containers and $2000 per box for 40 foot and 45 foot containers.
The scope of application includes Chinese Mainland, Hong Kong, Taiwan, China, Japan, South Korea, Vietnam, Malaysia, Singapore, Indonesia, the Philippines, Cambodia and other Far East regions.
At the same time, Maersk announced in the "Middle East Operations Update Announcement No. 40" released on July 24th that due to water safety risks, multiple inland land booking channels in the Middle East will be temporarily suspended, involving routes from the United Arab Emirates/Qatar via Jeddah Port and Oman Port, and from Jeddah Port to the United Arab Emirates/Oman/Qatar.
🔥 Important reminder: This adjustment is only for inland land side intermodal transportation services. Ocean shipping from the Far East to Middle Eastern ports has not been suspended, and alternative logistics solutions still exist in the market.
✅ Key reminder for foreign trade:
The premium for goods heading to ports in western Saudi Arabia and along the Red Sea coast will continue to exist.
It is not recommended to simply compare the basic freight cost. It is necessary to comprehensively calculate various temporary surcharges and the risk of shipping delays.
Orders executed through CIF/CFR must reserve cost fluctuation space in advance.
For trade involving markets such as Iraq, Kuwait, Qatar, Bahrain, Jordan, etc., it is recommended to verify the current service status and alternative route options with the shipping company in advance.
Collective pullback: West Coast, East Coast, Europe, Mediterranean routes
In sharp contrast to the market trend in the Middle East, the four major trunk routes were under overall pressure in August and entered a downward range.
European route (Nordic+Mediterranean)
Trend prediction: Freight rates will fall from high levels, fluctuate downwards, and lack upward momentum
The peak of stocking in the European market is gradually coming to an end, and the pace of replenishment by overseas importers is slowing down, resulting in a slight decrease in market volume compared to the previous period. Although the operating costs caused by detours still exist, forming a certain bottom support, the decline in demand has become the key to dominating the market. The supply of cabin space is relatively loose, and airlines will gradually release discounted prices in order to absorb cargo volume.
Comparatively speaking, the Mediterranean route is closer to the Red Sea and is more susceptible to short-term disruptions in route information, with greater fluctuations than the Nordic route. However, the overall trend is still dominated by looseness.
West/East Coast Route
▶ The US West Coast route: freight rates continue to be under pressure, with weak operation in stages.
The new US 301 tariffs officially came into effect on July 24th, and the previous concentrated rush to transport market has receded, weakening the momentum of cargo growth. Short combined voyage, concentrated deployment of overtime ships, rapid availability of cabin space, and gradual loosening of freight rates.
▶ The US East Coast route: a slight correction at a high level, but relatively resistant to decline
Demand has also slowed down due to the ebb tide of rush shipping, but the water level in the Panama Canal continues to decline, requiring ships to lower their loading rates for passage, resulting in a passive tightening of effective transport capacity and forming bottom support for freight rates. The decline is significantly smaller than that of the West Coast.
Quick Overview of Other Airline Routes
▶ The India Pakistan route has sufficient capacity allocation and obvious competition among airlines. The demand within the region is stable, but lacks strong price drivers, resulting in overall weak operation.
▶ Southeast Asian near ocean routes: Short range, flexible capacity allocation, less prone to unilateral fluctuations, and stable trend. Fluctuations in the prices of major air routes can have short-term emotional impacts, but it is difficult to form a sustained market trend. For goods with flexible delivery times, there is a good bargaining space.
Foreign traders should not judge the entire market based on the market trends of a single route. The biggest feature of August is the differentiation of flight routes and one price per place. It is recommended that everyone flexibly arrange the shipment pace based on the requirements of the destination port and delivery time, and prepare multiple logistics plans and cost contingency plans in advance to cope with fluctuations in freight rates and uncertainties in shipping schedules.
