CITIC Construction Investment: Freight rates on most shipping routes have declined, and oil freight rates continue to be strong

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that demand for consolidated transportation is generally stable, and freight rates on most routes have declined. SCFI remained flat from week to week; the US, West, and East America retreated slightly after rising in the previous period; Europe and the Mediterranean continued to fall due to weak demand; South America's decline widened; demand for Southeast Asian routes stabilized, and regional indices continued to rise.

The international oil transport index continued to rise, and crude oil prices diverged at high levels. BDTI and BCTI rose 10.2% and 9.7% each week; Middle East-China VLCC earnings rose slightly and remained at a very high level, the US Gulf and China continued to strengthen, and West Africa-China pulled back at a high level. Refined oil tankers remain strong, space on the Middle East LR long-haul routes is tight, and transatlantic MR is relatively stable.

Daily rents for all types of bulk carriers generally rose, with the Panamanian leading the way. BDI rose 3.1% weekly; the Cape model was supported by the tightening of Atlantic freight and capacity, and the Pacific market was under relative pressure; the Panamanian model had the highest increase driven by the increase in Atlantic freight and tight immediate capacity; the ultra-flexible model and the small compact model showed a moderate upward trend.

CITIC Construction Investment's main views are as follows:

Transportation: China's export container transportation demand was generally stable this week. SCFI remained flat from week to week, and freight rates on most ocean routes declined. The US, West, and East America adjusted slightly after rising in the previous period. Currently, supply and demand have not weakened significantly; Europe and the Mediterranean continue to decline due to weak terminal consumption and import demand; the supply and demand relationship in South America has further loosened, and the decline in freight rates has increased; volume in the Southeast Asian market has remained stable, and regional indices have continued to rise. Overall, routes will continue to be differentiated due to regional demand, capacity investment, and geographical risks.

Oil transportation: The international oil transportation market continued to be strong this week. BDTI and BCTI rose 10.2% and 9.7%, respectively, week on week, and the different routes of crude oil tankers shifted from an overall rise to a high level of differentiation. Navigation restrictions in the Strait of Hormuz and the southern Red Sea continued to occupy effective capacity; Middle East-China VLCC earnings remained at a historic high level and rose slightly; the US Gulf - China continued to strengthen, supported by remote supply demand and tonnight-nautical mile growth; West Africa and China pulled back at a high level after a rapid rise in the early period. Refined oil tankers remain strong, the capacity of the Middle East LR long-haul route is tight, and the transatlantic MR pallet is relatively stable.

Bulk transportation: The dry bulk shipping market has risen overall this week, and daily rents for various ship types have generally risen. Cape ships were supported by the increase in Atlantic iron ore pallets and the tightening of spot capacity in the North Atlantic, but the Pacific market limited the increase relatively loosely; Panamanian ships were driven by the increase in Atlantic grain and ore pallets and tight immediate capacity, leading the increase among all ship types; the Super Smart and Xiaoling models were supported by the North Pacific, Indonesia, the Gulf of America and the east coast of South America, respectively. Daily rents rose moderately.

The overall situation of the shipping market

Consolidation: The composite index remains flat, and freight rates for most routes have declined

This week, China's export container transportation demand was generally stable. Freight rates for most ocean routes fell, and the composite index ended a continuous rise. On September 24, the Shanghai Export Container Composite Freight Index (SCFI) reported 3686.62 points, which was flat from week to week. The market showed a fragmented pattern of “Europe, America and South America falling, and the Persian Gulf and Southeast Asia rising”: European import demand lacked growth momentum; transportation demand for American routes was generally stable, but immediate freight rates were adjusted after the previous rise; supply and demand fundamentals for South American routes weakened, and the decline in freight rates further expanded. Meanwhile, the situation in the Middle East and Red Sea security risks continued to drive the risk premium on Persian Gulf routes, and the Southeast Asian market continued to rise, supported by stable cargo volume. Overall, the current shipping market lacks a uniform direction, and regional demand, capacity investment, and geographical risk will continue to dominate the performance of various routes.

American routes: Fares in the US, West, and East US fell simultaneously. The US composite purchasing managers' index rose to 58.4 in September. Economic activity continued to expand, and transportation demand was generally stable, but market acceptance weakened after the rise in early freight rates. On September 24, the freight rates exported from Shanghai Port to the basic port markets of the US West and the US East were 7,463 US dollars/FEU and 10,497 US dollars/FEU, respectively, down 1.3% and 0.8% from week to week, respectively. Currently, supply and demand for the US line have not weakened significantly, and the US East freight rate is still above 10,000 yuan.

Asia, Europe and Mediterranean routes: Freight rates continue to fall, and demand side support is insufficient. The Eurozone consumer confidence index fell to -16.5 in September, and terminal consumption and import demand continued to weaken. There was no momentum for further growth in the market volume this week. On September 24, the freight rate for exports from Shanghai Port to the basic European port market was 2,313 US dollars/TEU, down 4.6% from week to week; the basic Mediterranean port was 3,065 US dollars/TEU, down 1.9% from week to week. Against the backdrop of slow recovery in demand and insufficient desire to book flights in the market, shipping companies' cabin control measures have yet to reverse the downward trend in freight rates, and short-term European routes are expected to remain weakly adjusted.

Latin American routes: South American freight rates have dropped sharply. On September 24, the freight rate of exports from Shanghai Port to the basic port market in South America was 6,530 US dollars/TEU, down 15.2% from week to week, making it the region with the biggest drop among major routes this week. Currently, transportation demand growth is weak, and the relationship between supply and demand in the market is further loosening. Shippers' wait-and-see sentiment and shipping companies' competition to collect goods are jointly driving down immediate prices. In the short term, the downward pressure on South American route freight rates has yet to be fully released.

Intra-Asian routes: Southeast Asian freight rates continue to rise, and performance by route is divided. The Southeast Asia Container Freight Index reported 5794.79 points, up 3.3% from week to week. Regional transportation demand is generally stable, but there are differences in cargo volume and space supply and demand on different routes, and market freight rates have mixed ups and downs. Overall, the Southeast Asian market is still supported by stable volume and is expected to remain volatile in the short term.

Oil transportation: The index continued to rise week on week, and VLCC diverged at a high level

The international oil transportation market continued to be strong this week, but different crude oil tanker routes began to diverge. On September 24, the BDTI index reported 5,250 points, up 10.2% from week to week; the BCTI index reported 2,099 points, up 9.7% from week to week. Navigation restrictions in the Strait of Hormuz and the southern Red Sea continue to disrupt Middle Eastern crude oil exports. Cross-bay connections, transfers outside the bay, and ships are waiting to take up a large amount of effective capacity, and risk premiums are still high. However, after the rapid rise in the early period, the pace of transactions for some VLCC routes slowed down, and the market shifted from an overall rise to a high level of fragmentation.

Middle East routes: Middle East-China VLCC earnings rose slightly at a high level. On September 24, the TD3C route TCE between the Middle East Gulf and China was about 1,2354 million US dollars/day, up 1.9% from week to week. Although the rivalry between shipowners and charterers has intensified at extremely high freight rates, strait traffic restrictions, delays in transit in the Gulf of Oman, and large numbers of ships being occupied by waiting and connecting services have kept effective capacity tight, and freight rates remain at historically high levels.

US Bay route: US Bay - China freight rates continue to rise. On September 24, the TCE for the TD22 route between US Bay and China was about 4071,000 US dollars/day, up 4.8% from week to week. The blockage in the Middle East supply chain has prompted buyers to pay more attention to remote supplies in the US, further increasing demand for tons of nautical miles; at the same time, a large number of VLCCs have been absorbed by the Middle East and the Gulf of Oman business, supporting freight rates across the Atlantic Ocean.

West Africa route: Higher freight rate correction between West Africa and China. On September 24, the TCE for the TD15 route between West Africa and China was about 5071,000 US dollars/day, down 3.3% from week to week. After the rapid rise in freight rates in the early stages, charters' acceptance capacity declined, and market transactions slowed down, but the Middle East capacity absorption effect is still there. The supply of usable ships in West Africa is limited, and the absolute level of freight rates is still high.

Refined tankers: The market remains strong, and LR long-haul routes have performed well. The BCTI index rose 9.7% from week to week. The supply of LR2 and LR1 ships in the Middle East is tight, and long-haul routes continue to be supported; transatlantic MR pallets are relatively stable, and regional performance is divided. Short-term geopolitical conflicts and the restructuring of trade flows for refined and chemical products will still support the refined oil tanker market.

Bulk transportation market: Daily rents for all types of ships generally increased, Panamanian models led the way

The dry bulk shipping market has risen overall this week. Panama-type ships had the highest increase, cape-type ships fluctuated at a high level, and ultra-flexible and small portable models rose moderately. On September 24, the Baltic Sea Dry Bulk Index (BDI) reported 3,473 points, up 3.1% from week to week; Cape Ships reported daily rent of 5,3864 US dollars/day, up 3.0% from week to week; Panamax reported 21,434 US dollars/day, up 5.8% from week to week; Super Smart Shipping reported 2,2525 US dollars/day, up 0.9% from week to week.

Daily rents continued to rise, supported by an increase in the Atlantic iron ore pallet and the tightening of spot capacity in the North Atlantic. However, the Pacific market's pallet and capacity match was relatively relaxed, limiting the overall increase. Panama-type ships performed best. Atlantic grain and ore pallets increased, immediate ship supply was tight, Australian and North Pacific pallets also provided support, and activity in the Indonesian coal market resumed. Super flexible ships were supported by demand from the North Pacific and Indonesian pallets and European scrap transportation, and rose slightly; small portable ships were driven by inquiries from the Gulf of America and the east coast of South America, and their performance was relatively steady. Overall, all ship types are supported by pallets, but regional performance still varies, and it is expected to continue to fluctuate at a high level in the short term.

Review: Freight prices rose sharply in the first half of 2026, the blockade of the Strait of Hormuz pushed up fuel costs, and tariff rush triggered an “early peak season”. Combined with multiple factors, the market showed a sharp rise in volume and price

In the first quarter, after the Spring Festival at the beginning of the year, the shipping market entered the traditional low season, and freight rates fell back normally. However, by the end of February, the war between the US and Iran suddenly began, the Strait of Hormuz was blocked, international oil prices rose sharply, and fuel costs surged, and companies were forced to shift fuel costs to freight charges, driving a sharp rise in freight rates; at the same time, in order to avoid the adverse effects of the war, many shipping companies diverted routes through the Suez Canal to a corner of good hope, greatly lengthened the range and effective capacity supply decreased; in addition, shipping companies charged war surcharges, and freight rates on various routes around the world skyrocketed by about 37% within a month after the war broke out..

Entering the second quarter, the impact of the Middle East geopolitical conflict on freight rates continued, and the “rush wave” triggered by tariff policy adjustments drove freight rates to continue to rise. By route, South American routes were affected by Brazil's tariff increase on June 1. Merchants concentrated on early shipments, and the SCFI index for South American routes nearly doubled in May; North American routes were affected by policies such as the re-imposition of tariff nodes under US Section 301 on July 24 and the imminent implementation of new US Consumer Product Safety Commission (CPSC) regulations. A “rush wave” broke out in May. Within a month, the SCFI index for the US, West, and East US routes rose by 52.4% and 44.5% respectively; the Southeast Asia and Africa routes were affected by increased trade volume and continued to rise. Furthermore, Southeast Asia Some ports were hit by both electricity shortages and port congestion, further increasing capacity constraints and boosting route prices; at the same time, due to the surge in demand for American routes and high profits, a large number of ships and container resources originally scheduled to sail Southeast Asia and Europe were being siphoned off, causing other routes around the world to passively reduce capacity and boost the global freight market; the Persian Gulf route increased due to geographical conflict. Actual traffic volume was only about 40% during the same period. Overall, the shipping company achieved the profit level expected by the market in the first half of 2026.

In terms of trade volume, Asia's trade volume with North America declined in 2025, but the increase in trade volume with Africa, South America, Southeast Asia, and Europe hedged the decline in North American routes. From January to April 2026, Asia's trade volume with Africa and Oceania increased by 28.23% and 16.67%, respectively; due to rush shipments due to Brazil's tariff adjustments, Asia's trade volume with South America increased by 18.36%; Europe benefited from a sharp increase in demand for new energy products, effectively bridging the gap for traditional products, and the trade volume increased 14.27% year on year; affected by the expiration of the US tariff policy node in July, Asia's trade volume with North America exploded in May, with a year-on-year increase of about 18%. Overall, the shipping market showed a sharp rise in volume and price in the first half of the year.

Outlook: Freight rates are expected to peak and fall in the second half of the year, medium- to long-term rate volatility will increase, and the center will remain relatively high

(1) The Middle East conflict has cooled down, the decline in fuel costs is compounded by the implementation of tariff policies in American countries, and there is a strong expectation that high freight rates will peak and fall back

On June 22, the US and Iran signed a memorandum of understanding, announcing a 60-day cease-fire. Iran then announced that navigation in the strait would resume. Geographic risk expectations were drastically reduced, and international oil prices fell rapidly. By June 26, they had fallen back to pre-conflict levels, and fuel costs for shipping companies were drastically reduced; at the same time, as Brazil's tariff reform officially implemented, the US tariff adjustment policy point approached, rush shipping demand would weaken, and the demand side would return to normal, and short-term freight transport prices are expected to fall back to normal.

(2) The supply side is favorable in the short term and under pressure in the medium to long term. The resumption of navigation in the Red Sea is still a decisive factor

In terms of additional supply, 1.5 million TEU of capacity is expected to be delivered in 2026, with a nominal capacity growth rate of about 3.7%, the lowest value since the past 3 years. However, in 2027, 2028, and 2029, it is expected that 3.4 million, 3.7 million, and 2.5 million TEU capacity will be delivered respectively, and the supply side will be under great pressure in the future. However, at present, the proportion of ships in the industry that are older than 15 years is 36%, and the proportion of ships older than 20 years is 16%. If the market can effectively gradually remove old ships of 20 years or more over the next 5 years, then there will be no big fluctuation in the supply of capacity in the market.

Looking at the medium to long term, there is some uncertainty about the impact of new supply on the market, and whether the Red Sea can be navigated normally is still a decisive factor. The Red Sea crisis has caused the global container fleet to lose about 10% of its capacity. The resumption of navigation in the Red Sea will cause a large amount of capacity to be released in the short term, and port congestion will increase, but the increase in supply in the medium to long term will still put a lot of pressure on freight rates.

(3) Uncertainty about countries' tariff policies towards China continues to disrupt freight rates

China's exports were strong in the first half of 2026. In the first five months of 2026, China's total exports of goods amounted to RMB 11913.7 billion, an increase of 11.8% over the previous year. In the first five months, China's exports to ASEAN, the European Union and the “Belt and Road” countries increased by 13.5%, 7.7%, and 10.4%, respectively. Container throughput at major ports in China increased in the first five months of 2026, and the throughput of major foreign trade container ports grew by more than 7%.

China's trade surplus reached a new high in 2025, and the rapid growth in exports in the first half of 2026 is expected to further raise the level of China's trade surplus. In May 2026, China's trade surplus was US$105.43 billion, up from US$102.72 billion in the same period in 2025.

The continued rise in trade surpluses may trigger changes in other countries' tariff policies towards China. Currently, some countries continue to strengthen their scrutiny of Chinese goods. The European Union has continued to push forward trade investigations in the fields of electric vehicles, steel, solar energy, etc. ASEAN countries are also becoming more wary of Chinese goods being exported to Europe and the US via a “transit bypass” in the region. Tariff actions against Chinese exports may become more frequent in the future.

Frequent tariff disturbances will increase the uncertainty of freight rates. Every time the tariff window approaches, shippers concentrate on early shipments, and space is quickly tightened, and spot freight prices rise rapidly; after the window closes, overdrafted demand forms a vacuum, and freight rates fall rapidly. The continuous repetition of this model will cause the traditional off-peak season to disappear, the rules of the tariff cycle will be disrupted by tariff policy points, and the fluctuation range of freight rates will expand significantly.

(4) Container port congestion is normalized, container turnover efficiency is reduced, and supply chain uncertainty is increasing

In recent years, the level of global port congestion has gradually increased. Currently, the level of global port congestion is at the same level as during the global public health incident. Among them, the Northeast Asia region has the worst port congestion situation, accounting for 40% of the total congested capacity, while Southeast Asia and the Mediterranean each account for 10% of the total congested capacity. The root cause of port congestion is the continuous expansion of the container fleet over the past few years and the long-term lag in port infrastructure investment.

Furthermore, port congestion lengthens the length of time containers stay in port and exacerbates the geographical mismatch of empty containers, making the actual usable volume far below the nominal quantity; compounding disruptive factors such as extreme climate and strikes, it makes it difficult to effectively repair container capacity loss in the short term, objectively forming a continuous hidden constraint on the capacity supply of the global shipping market.

Overall, there is a strong expectation that freight rates will fall back from a high level in the second half of 2026.

In the short term, demand and cost are weakening at the same time. The rush to rush shipments in the first half of the year overdrew subsequent cargo demand, creating a vacuum in transportation demand; at the same time, falling oil prices reduced the operating costs of shipping companies and weakened their motivation to maintain high freight rates. The combination of two factors together contributed to the decline in freight rates in the second half of the year.

In the medium to long term, the supply-side Red Sea resumption process is still a decisive variable — once navigation is normal, detour capacity will return on a large scale, and effective supply will expand significantly; centralized delivery of additional capacity from 2027 to 2029 will also increase supply pressure, but older ships account for a relatively high proportion of the global fleet. If aging capacity is eliminated and accelerated, part of the new supply can be hedged, keeping the total capacity within a relatively reasonable range. From the demand side, China's exports have maintained a growth trend, and the outlook is relatively optimistic; adjustments in countries' tariff policies to China will disrupt the pace of companies' shipments, compounded by factors such as the tightening of China's export tax rebate policies, phased shipping may become the new normal, and freight rate volatility will increase.

Overall, freight rates in the shipping market will be under pressure in the second half of 2026. Focusing on a longer cycle, factors such as tariff policy games, geopolitical disturbances, and global port congestion are intertwined. Supply chain uncertainty continues to rise, and the traditional cyclical rules of freight rates tend to weaken and increase volatility. Despite this, the long-term undertone of demand growth and supply-side rigid constraints have not been fundamentally reversed, and the freight center still has the basic support to maintain a relatively high level.

Oil transportation: gradually moving towards compliance

The Russia-Ukraine conflict changed the global crude oil supply pattern. Due to restrictions on Rosneft, the European Union and other countries have greatly reduced their dependence on Rosneft, and Rosneft has been supplied to the Asian region instead. Meanwhile, other oil producers such as the United States and Brazil are expanding production, and some African countries have withdrawn from the OPEC organization, causing OPEC's share to gradually decrease, leaving other countries with market space to increase production. Entering 2025, OPEC changed its previous production reduction strategy, switched to increasing production, and entered the stage of actual production increase. Although the increase in production does not necessarily indicate an increase in marine crude oil exports, the actual seaborne trade volume data observed since August has indeed increased, effectively driving up crude oil tanker freight rates.

Although China's marine crude oil imports weakened in 2024 and early 2025, the trend has been stronger in recent months, with imports increasing by 5% year-on-year in the third quarter. Strong refinery processing volumes also provided additional impetus for imports. In 2025, an average of about 14.8 million barrels/day of crude oil was processed, up 3% year on year, and processing volume increased 7% year on year in the third quarter. The increase in fuel oil and asphalt import taxes in the first half of this year supported this trend, prompting independent refiners to switch to processing more crude oil volumes. Growing demand for petrochemical raw materials has also played a supporting role, while refinery maintenance plans have been reduced in recent months, particularly at state-owned plants.

Significant acceleration in inventory activity and increased refinery throughput have boosted import demand, and the increase in China's freight volume has also provided potential support for the crude oil tanker market this year. The number of days China's crude oil inventory can be used has increased to 110 days. So far, China's crude oil strategic reserves+commercial inventory has increased by 150 million barrels, worth about 10 billion US dollars. It is expected to rise to 140-180 days in the future. The main reasons are: (1) the current oil price is at a historically low level, providing a strategic purchasing window; (2) the new Energy Law, which came into effect in 2025, requires state-owned and private companies to share strategic reserve obligations, creating an institutional momentum for accumulation; (3) about 20-30% of oil imports come from countries sanctioned by Europe and the US, and there is a risk of supply disruptions. The increase in reserves is to prepare for potential crises (including the geographical situation, etc.); (4) The current account surplus is huge, providing foreign exchange funds to buy crude oil.

Refining capacity continues to expand (expected to exceed 18 million b/d in 2026) to support crude oil demand. Continued inventory momentum is likely to support imports until 2026, state-owned oil companies will further increase crude oil storage capacity by 169 million barrels, and a further slowdown in oil prices may also provide support. China's marine crude oil imports are initially expected to increase by 3% to 10.7 million b/d next year, but there may be room for further growth.

Due to the expansion of sanctions against shadow fleets in Europe and the US, especially since the beginning of 2025, the US has increased sanctions on shadow fleets, which has led to a reduction in effective capacity in the market, boosting the center of freight rates, and increasing the flexibility of freight rates during peak seasons. Currently, about 16% of the VLCC fleet is restricted. In particular, Aphra ships, which are closely related to Russia, account for 33%.

Although the price of newly built ships has declined somewhat recently, the overall transaction value of used ships is still rising. This has something to do with the recent sharp rise in rents. Assuming a 10-year-old ship, the price of a new ship built in 2015 was about 95 million US dollars. Based on 20 years of depreciation, the current book value is 47.5 million US dollars, but the current book value is 47.5 million US dollars, but the market value has reached 88 million US dollars, and the value-added rate has reached 85%.

Although supply pressure has increased in 2026, and there will be restrictions on the height of freight rates, aging is still serious, and the freight center is gradually moving upward.

Special transport: Three new exports drive market demand, and specialty goods export boom continues

As of August 2025, China's total exports of clean energy technology reached a new high, with a total value of more than US$141 billion. Europe is almost China's largest importer of clean energy products. The Middle East, Latin America, and Africa are the regions with the greatest potential for future growth. Due to the large-scale expansion of new energy equipment, product transportation is gradually shifting from containerized transportation to special goods transportation, especially products such as wind power equipment and energy storage cabinets.

Risk Alerts

Policy risks brought about by changes in the Global Liner Union's regulatory policies

Faced with rising freight rates in the shipping market, the US National Industrial Transportation Union (NITL) and others have put pressure to interfere with the liner union's antitrust immunity. In the short term, there is little evidence that the liner union has a monopoly on pricing; the EU side has always refused to intervene with liner companies. The EU believes that shippers have enjoyed the benefits of increased flight density, increased route coverage, and reduced number of transit times brought about by the liner union. In the medium to long term, if high freight rates in the shipping industry continue to rise, the US government or the EU may re-examine the existence of global liner alliances, or the risk of fluctuations in the shipping market caused by changes in global liner union regulatory policies.

Global trade risks as the Russia-Ukraine conflict continues to escalate

The ongoing conflict between Russia and Ukraine will seriously affect European and Russia-related route trade, leading to the collapse of the global shipping system, and there is even a risk that the globalization process will regress. Investors are advised to pay close attention to the evolution of the war situation, energy policies and sanctions.

Risk of regional conflict in Iran

If the conflict continues in Iran, it will affect global energy-related routes and have a negative impact on the global energy transportation system. Investors are advised to pay close attention to the evolution of the war situation, energy policies and sanctions.

Fuel costs have risen sharply

Due to fluctuations in international crude oil prices, there is a risk that fuel costs for shipping companies will rise sharply. Second, Singapore is the world's largest consumer and distribution center of fuel oil. Geopolitics may have an impact on fuel oil production in Singapore, leading to a sharp rise in fuel costs. Finally, environmental regulations and policies of the IMO and national governments may significantly increase fuel costs for shipping companies. Historically, the 2020 Global Sulphur Restriction Order brought huge changes to the consumption structure of the bonded marine oil market. Alternative fuels such as low-sulphur fuel oil, MGO, and LNG clean energy all greatly increased marine fuel costs, which in turn led to sharp price fluctuations.