Summary of Key Points
Recently, the trends in the global maritime and air freight markets have been completely opposite: Maritime transport has seen a decline in demand due to companies shipping goods ahead of schedule in the first half of the year (to avoid tariffs), resulting in falling freight rates from their peak levels, although capacity is recovering slowly. On the other hand, air freight has seen a surge driven by the demand for AI hardware (such as servers), especially on routes between Asia and North America, where capacity is tight and rates remain high. There is also a clear differentiation in market performance, with some routes experiencing significant growth while others are shrinking.
I. Why Is Maritime Transport Declining?
The decline in maritime transport can be attributed to companies shipping goods ahead of schedule this summer, amid concerns about potential tariff changes. For example, many exported goods destined for the United States were shipped between May and July, leading to a natural decrease in demand.
- Falling Freight Rates: The Global Container Index (WCI) has dropped for three consecutive weeks, although it rose slightly by 1% at the beginning of August. Overall, however, the trend is downward. On routes like the U.S.-West Coast, booking space now only requires 1-2 weeks, compared to the previous 3-4 weeks, indicating that capacity is less constrained.
- Regional Differences: Freight rates on routes between Asia and Europe remain relatively stable, but those between Northern Europe and the Mediterranean are also declining. The problem of containers not being loaded onto ships (and thus remaining in ports) has eased. However, routes to the East Coast of the United States and the Gulf of Mexico remain tight due to high demand and limited capacity, with shipping companies imposing surcharges because of the Panama Canal's water depth restrictions.
II. Why Is Capacity Recovery Slow in Maritime Transport?
Despite the decrease in demand, capacity has not recovered quickly for several reasons:
- Slow Supply Chain Recovery: Shipping companies need time to reassess route safety (e.g., due to the situation in the Middle East), insurance costs, and how to optimize their fleets, as well as to manage the distribution of empty containers.
- Unreduced Costs: Additional fuel and security fees imposed during the tense period in the Middle East will not be immediately eliminated; shipping companies need to recover the extra expenses incurred from detours. Although oil prices have dropped from $121 per barrel to $80, they are still higher than the pre-conflict level of $70, putting pressure on freight rates.
- Incomplete Inventory Replenishment: Although U.S. imports have decreased, this is not due to reduced consumption but rather because too much was imported in advance. Companies are now replenishing their inventories (which are still low), and imports may increase again, meaning the pressure on capacity will not completely subside.
III. Why Is Air Freight So Popular?
Air freight has seen a surge driven by the demand for AI-related products, particularly high-value, time-sensitive goods such as AI servers and semiconductors.
- Surging Demand: Air freight imports of high-tech goods in the United States increased by 57% in the first quarter, equivalent to an additional 16 aircraft per day carrying these goods from Asia. Routes between Asia and North America have seen double-digit growth for five consecutive months, with load factors approaching 90%, indicating near-full capacity.
- High Freight Rates: Global air freight rates increased by 17% in the first half of the year. Although spot rates dropped from 41% in May to 38% in June, they remain high. Semiconductor sales surged by 106% year-on-year in April, mirroring the increase in trans-Pacific freight rates. Strong chip demand has driven air freight growth.
IV. Clear Differentiation in Air Freight Markets
Not all air freight routes are benefiting from the AI trend, and the demand for AI-related goods can affect other industries:
- Differential Route Performance: Routes between Asia and North America are performing well, but those between Europe and the Middle East have seen a 40% decline due to the conflict. The market focus has shifted from overall trends to specific regions with strong demand.
- Impact on Non-AI Industries: Although AI-related goods receive priority in shipping, if your products use the same airports and airlines as AI goods, you may face reduced capacity or higher freight rates.
Final Note on Oil Prices
Oil prices have fallen from their peak levels, but markets are largely indifferent to the situation in the Strait of Hormuz, assuming a diplomatic resolution will be found. Experts predict that prices will drop below current levels within six months but are unlikely to return to $55-60; they are likely to hover around $70. Since oil prices affect maritime freight costs, these rates are not expected to decrease significantly.
In summary, the divergence between maritime and air freight markets will continue for a while: Maritime transport will gradually cool down due to slow capacity recovery, while air freight will remain high driven by AI demand until the peak in AI hardware demand is passed or capacity catches up. For individuals purchasing imported goods, maritime freight rates are unlikely to rise further, but high-tech products (such as AI-related equipment) may continue to be more expensive through air transport.