U.S. Freight Rates Drop and Volume Analysis
Freight Rate Decline
After several weeks of consecutive increases, container shipping rates have reached a turning point in mid-July, beginning a broad decline. According to the latest Shanghai Export Containerized Freight Index, as of July 19, the index fell to 3542.44 points, down 3.6% from the previous period, with all four major ocean routes experiencing declines of over 1%.
On the North American routes, weakening supply and demand led to continued rate adjustments. As of July 19, the freight rate from Shanghai to the U.S. West Coast (including sea freight and related surcharges) dropped to $7,124/FEU, a decrease of 6.9% month-over-month. Meanwhile, rates to U.S. East Coast base ports fell to $9,751/FEU, a 1.3% decline.
The rate decrease is primarily driven by increased capacity. Since early July, additional capacity has been continuously added to the North American routes, including extra vessels and new carriers, leading to a gradual reduction in rates. This downward trend is expected to persist through late July.
Although July to August is typically a peak freight season, this year’s peak arrived early, and significant growth in freight volume is unlikely in August and September. However, some analysts believe that while current freight rates are undergoing a correction after peaking, the potential for further decline is relatively limited.
Volume Analysis
In the first half of this year, West Coast ports accounted for 60.6% of China’s sea freight to the U.S., marking a slight increase of 1% from last year but still 1% lower than in 2019. East Coast ports experienced a 0.7% decline year-over-year, with a 2% decrease compared to 2019.
Gulf Coast ports, however, maintained stable market share, with a 5% increase from 2019, indicating strong growth trends.
Long-term trends show a continued decline in West Coast port share, while East Coast and Gulf Coast ports, particularly the latter, are gaining ground. Population growth and economic activity in these regions, combined with proactive port authority initiatives and lower logistics costs, have attracted more shipping companies to increase capacity.
The Gulf, led by Houston, has seen significantly more direct services. Despite stalled West Coast labor negotiations leading to a shift of cargo to the East Coast, data from the first half of the year shows no significant rebound in West Coast volume, with East and Gulf Coast ports remaining attractive.
Carriers Enhance Deep Inland U.S. Services
Recently, COSCO Shipping launched a one-stop express delivery service from East China (Shanghai) and South China (Yantian) to U.S. inland cities including Chicago, Kansas City, Dallas, Memphis, and Atlanta. This service covers full-container shipping, optional customs clearance, trucking, and 53-foot container transfers, with direct delivery to customer warehouses via a Team Driver model.
On-Time Delivery: Cargo from the port of origin will be delivered to the final destination within 19 days (departing from Shanghai) or 21 days (departing from Yantian).
Delay Compensation: If delivery is delayed by 24-48 hours, compensation of $200 per 40GP or 40HC container will be provided; for delays of 48-72 hours, $500 per container; and for delays over 72 hours, $1,000 per container.
This service aims to accelerate deep inland services, enhancing the timeliness and reliability of cargo transport and providing customers with a superior logistics experience.
Surge in Chinese Sellers on TikTok Post-Biden Withdrawal
On July 21, 2024, President Biden announced his withdrawal from the U.S. presidential race, endorsing Vice President Harris as the Democratic nominee. This development, coupled with the rising chances of Trump’s return due to a recent shooting incident, could significantly impact U.S.-China trade relations and the global trade landscape.
Previously, Trump, in a TikTok video with Turning Point USA founder Charlie Kirk, promised never to ban TikTok. On July 17, Trump reiterated his support for TikTok, stating that “we need competition,” and that banning TikTok would only benefit Facebook founder Mark Zuckerberg.
It is increasingly clear that TikTok will not be banned. TikTok has become a crucial ecosystem in U.S. content e-commerce. From December 2023 to June 2024, the number of TikTok shops in the U.S. grew by 47%. In June 2024, 106 TikTok shops in the U.S. surpassed $1 million in monthly GMV; in July alone, two live streams exceeded $1 million. More influencers, MCNs, and celebrities are preparing to expand their reach.
Additionally, TikTok has introduced initiatives like the “Billion Club” and removed the $2 million threshold for Amazon sellers, injecting new momentum into TikTok’s growth in the latter half of 2024. This is expected to lead to an explosion of Chinese sellers entering TikTok in the coming months.
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