The soaring prices of trans Pacific routes have set new records, and may slow down next month!

In fact, the recent increase in freight rates on trans Pacific routes is a reasonable phenomenon that occurs when liner companies make appropriate suspension arrangements based on specific market conditions, and the market supply and demand relationship is dynamically balanced.

From the Sino US trade friction to the outbreak of the COVID-19, to the current intensification of tensions between China and the United States, the uncertainties and instability affecting the shipping market have increased significantly. This one after another "black swan" has increased the difficulty for shipping companies to make market judgments, especially on cross Pacific routes.

At the beginning of this year, industry analysts predicted that demand for eastbound trans Pacific routes would slightly decline by 0.8%. Therefore, the traditional Spring Festival flight has been suspended this year, and the market has not withdrawn too much capacity. However, after the outbreak of the COVID-19, the demand for eastbound trans Pacific routes throughout the year was once reduced to 16%. In this context, liner companies have rapidly increased their suspension scale. When the suspension was at its maximum, the capacity of the eastbound market decreased by 17%, which is equivalent to a 16% reduction in cargo volume, and there was no abnormal capacity reduction.

But with the recovery of demand for some routes, some foreign trade companies have reported that "liner companies are not actively increasing capacity", leading to a sharp rise in freight rates. In fact, upon careful tracking, it can be found that starting from May this year, combined with changes in demand, liner companies have gradually resumed their capacity through individual voyages, as well as suspending or canceling partial suspensions.

Entering June, in response to the stock shortage on the Trans Pacific route, in order to meet the shipping needs of customers, the market began to see overtime ships, and transportation capacity quickly recovered. As of the end of June, the weekly transportation capacity of the trans Pacific route market has approached 460000 TEUs, almost equaling the level of the same period last year.

For cruise companies with global routes, individual route fare increases do not necessarily equate to overall revenue growth and increased profits. Against the backdrop of a significant drop in freight rates on most routes, a gradual recovery in oil prices, and highly uncertain future transportation demand, liner companies are facing no less operational pressure than foreign trade enterprises.

According to eeSea data, only 10 out of the 245 scheduled Asian American voyages in August were suspended, and only 5 out of the 243 scheduled Asian American voyages in September were suspended.

There is currently no consensus on whether maritime trade routes can withstand the decrease in demand caused by the pandemic. However, there are rumors that a decrease in factory orders may lead to a significant decrease in ship bookings in September. In addition, the soaring freight costs, the risk of container rejection, the increasing demand for personal protective equipment, and the launch of electronic products during peak seasons have brought air freight back to people's sight.

A survey conducted by US freight forwarders shows that the order volume of Chinese factories may slow down, which will hit the shipping container industry in September. According to data from freight forwarding companies, August itself is still strong, but weaker than July, and the loading capacity for September is still uncertain.