NEWS CENTER

WARNING OF RISING OCEAN FREIGHT PRICES!

Release Time:

Sep 01,2025

The global shipping chain remains strained.

Red Sea Crisis and the Cape of Good Hope Route: Since late 2023, tensions in the Red Sea region have persisted, prompting many ships to opt for a route around the Cape of Good Hope. This route not only increases distance (for example, the average voyage to Northern Europe increases by approximately 9,000 nautical miles, adding 10-15 days to a single voyage), but also directly reduces vessel turnover efficiency.

Container shortages: Longer shipping routes have slowed container return flows (by approximately 2-3 weeks). While large domestic shipping companies may have some advantages in container allocation, they will struggle to meet all demand in the short term. The shortage of containers has driven up container costs.

Policies and Demand Surging in South America

Brazil's Tariff Adjustments: Brazil plans to gradually increase import tariffs on electric vehicles and photovoltaic products. For example, the import tax on electric vehicles is scheduled to rise from 10% to 35% in 2026. This has triggered a strong rush to export, with many companies eager to ship goods before tariffs rise further.

Strong Demand from Chinese New Energy Vehicle Companies: Chinese new energy vehicle companies (such as BYD) are actively exploring the South American market, recently shipping a large number of electric vehicles to Brazil. This type of cargo not only occupies a significant amount of shipping space, but also, due to its nature (sometimes using container shipping to replace limited ro-ro shipping capacity), further exacerbates shipping capacity constraints.

Strategic Behavior of Shipping Lines

Capacity Allocation: When certain routes (such as the transpacific) become more profitable due to a short-term surge in demand, shipping lines may reallocate some capacity from routes like South America to these high-profit routes. This directly leads to a relative reduction in capacity supply on South American routes.

Surcharges: Shipping lines may impose surcharges such as Peak Season Surcharge (PSS) or General Rate Increase (GRI) based on market conditions. For example, Hapag-Lloyd announced a $500 per container increase on the Far East to East Coast South America route, effective September 1, 2025.

Seasonal Demand and Market Expectations

Traditional Peak Season Effect: The third quarter of each year is traditionally the peak season for the shipping industry, as retailers stock up for the year-end Christmas season. By the end of August 2025, shipping companies had already issued a flurry of September freight rate increases, signaling the onset of a peak season price hike.

Market Psychological Expectations: When market expectations of freight rate increases are widespread, shippers may preemptively ship goods to avoid higher future costs. This "rush shipping" behavior will concentrate demand in the short term, further exacerbating shipping space shortages and increasing freight rates.

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