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Home Rates & Surcharges Shanghai container freight futures point to declining rates in 2025

Shanghai container freight futures point to declining rates in 2025

Launched in August 2023, the Shanghai INE EC container freight futures contract, based on the SCFI’s China – North Europe sub-index, managed to find its footing in 2024, gaining increasing acceptance as a hedging tool among Chinese as well as some first European forwarders and shippers.

Shanghai container freight futures started 2024 at around 1,850 index points. One volatile year later, it looks like the market is back to square one, with market participants asking the same question as last year: will overcapacity finally push down freight rates?

While Cape of Good Hope diversions managed to soak up sufficient capacity to turn an expected glut of new ships into a capacity shortage, these diversions are now baked into price expectations for 2025. With more newbuilds already in operation and still more being delivered, chances are history won’t repeat itself.

The impact of the year-end GRI push has now fully dissipated, with the nearby February and April 2025 contracts hitting 2,065.7 and 1,469.1 points today to trade at their late September levels and only about 25% above their March lows. The far-dated October and December 2025 contracts are both approaching their lowest level in 12 months after settling at 1,276.6 and 1,343.7 points respectively.

The liner GRI was generally successful in pushing up futures prices across the board throughout October and November, but from December on prices for the 2025 contracts began to slide amidst doubt about how long carriers would be able to maintain their higher spot rates.

An early Lunar New Year and the threat of increased tariffs helped support the GRI efforts by promoting frontloading, but with the window for pre-Trump arrivals long closed and LNY approaching fast, support for the current price level is eroding.

The GRI offered a perfect hedging opportunity for carriers, who could have locked in October 2025 rates by selling the contract at 1,750 points, 500 points higher than today’s level, or almost US$800/FEU, to secure October 2025 rates of US$2,800/FEU. This compares with current market expectations of US$2,000/FEU, and rates are still falling fast. The contract is down over 5% since January 1, and over 22% since December 1.

Comparing the forward curves from January 2024 and 2025, we can see that the expected price level is already almost 500 points below where expectations for 2024 were. At the peak of the GRI impact, carriers managed to push long-term expectations just about to that level, but since then there has been a steady decline in prices for all contract months.

Absent any new major disruptions to global supply chains, the futures market clearly expects freight rates to decline further, providing some relief to shippers after last year’s volatility.





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