The shipping industry is reducing the capacity on routes from East Asia to the United States. This is because the transportation demand, which significantly increased after the United States and China delayed high tariffs under the Geneva agreement last May, has recently decreased again, resulting in falling freight rates.
According to Sea-Intelligence, a Danish shipping analysis firm, the global shipping companies' capacity planned for routes from Asia to the United States next month was investigated at 360,000 TEU (1 TEU is one 20-foot container) as of the 18th. This figure represents a decrease of about 5% compared to the 380,000 TEU reported on the 13th of last month.
The planned capacity for this month was also surveyed at 400,000 TEU as of the 13th of last month, but as of the 18th, it recorded a decrease of 8% to 370,000 TEU.
Sea-Intelligence analyzed that shipping companies, anticipating a continuous increase in transportation demand due to the tariff delay decision by the United States and China, have started to expand supply, but with recent demand rapidly decreasing, they are readjusting the planned supply.
In fact, the cargo volume to the United States is showing a decreasing trend. According to Descartes, a U.S. trade data analysis firm, the container import volume in the United States last month was 2,217,675 TEU, a decrease of 3.5% compared to the same period last year. After recording an increase of 9.1% to 2,410,371 TEU in April, the U.S. container import volume has shown a decline for two consecutive months.
Freight rates are also rapidly falling. The freight for routes from Shanghai, China, to the U.S. West Coast was recorded at $2,067 per FEU (1 FEU is one 40-foot container) as of the 25th, a decrease of 3.5% from the previous week. This is a drop of 63% compared to the freight rate of $5,606 in June.
The market outlook is also not bright. The Korea Ocean Business Corporation (KOBC) noted, "Due to the uncertainty arising from the tariff policy of former U.S. President Donald Trump, the demand for cargo headed to the United States has decreased," and added, "There is a high possibility that cargo volume in the second half of the year will also decrease compared to the same period last year due to the increased tariff rates."
The decline in freight rates on routes to the Americas is expected to lead to poor performance for domestic shipping companies such as HMM and SM Line, which primarily operate in this sector. In particular, HMM generated 40% of its total revenue from the Americas last year, and many expect that its profits will substantially decrease due to the recent drop in freight rates. Shinhan Investment Corp. forecasts that HMM's revenue will be 10.472 trillion won, a decrease of 10.5% from the same period last year, and that operating profit will be 1.749 trillion won, a decrease of 50.2%.