Freight Futures Plunge

Affected by the first resolution passed by the UN Security Council on June 10 to support the Gaza ceasefire plan, the main contract and futures of the Shanghai European Line Shipping Index fell sharply in the morning trading on June 11.

In the trading on June 11, the European Line Shipping Futures opened high and fell, and experienced a significant dive during the trading session. In particular, the main contract of the European Line Shipping (EC2408) once fell by more than 9% during the day, and the long-term contracts EC2410, 2412, 2502, and 2504 also hit the limit.

However, the final decline was narrowed, and the price decline of the main contract and other futures contracts ranged from 3.48% to 10.39%.

In addition, on June 11, the overall index of the Baltic Dry Index (BDI) concept fell by more than 7%. As of 10:42, it was reported at 2444.960 points.

This trend also led to a corresponding decline in the share prices of container shipping companies, with Evergreen, Yang Ming and Wan Hai falling by 9.4%, 9.89% and 8.32% respectively, and Yang Ming even closing at the lower limit.

According to relevant people's analysis, the reasons are as follows:

On the one hand, the recent performance of shipping stocks is strong, and there is a profit-taking sell-off due to the large short-term gains; on the other hand, the Red Sea crisis may be resolved and shipping prices may fall.

Affected by multiple factors such as the Red Sea situation, rising demand, and port congestion, shipping prices have continued to rise since June.

At the same time, Maersk, CMA CGM, Hapag-Lloyd and other leading shipping companies have successively issued the latest notices of peak season surcharges and price increases.

However, due to the delays caused by the detour of the Red Sea and the recent surge in container throughput, some ports around the world are seriously congested, including many Asian ports such as Singapore, Shanghai, Qingdao, Port Klang and Colombo. Among them, the port of Singapore is particularly crowded, with the highest number of containers waiting to berth reaching 480,600 standard containers.

In this regard, from a static perspective, under the continued geopolitical disturbance, shipping companies consume a lot of effective capacity by detouring, resulting in a shortage of capacity. From a dynamic perspective, the efficiency of some ports has declined, resulting in longer schedules and the possibility of further disruption of the supply chain. On the demand side, gradually entering the peak season in July and August, spot freight rates are expected to be supported.