Launched in August 2023, the Shanghai INE EC futures contract based on the SCFI China-Northern Europe Sub-Index has gained popularity in 2024 as a hedging instrument. The contract has gained recognition among Chinese participants and early European forwarders and shippers. The year began at 1,850 index points, but by the end of the year the market had returned to its starting point, again raising the question of a possible rate cut due to excess vessel capacity.
In 2024, vessel reroutes around the Cape of Good Hope allowed to partially reduce the excess of new vessels, but these factors are already priced into the expectations for 2025. With further new vessel introductions, the likelihood of such a scenario recurring is decreasing. The end of the year saw a waning of the growth rate effect (GRI), with February and April 2025 contracts trading at 2,065.7 and 1,469.1 points respectively, just 25% above their March lows. Longer-term October and December 2025 contracts reached 12-month lows of 1,276.6 and 1,343.7 points.
Rates were temporarily boosted by the GRI in October and November 2024, but the market has been softening since December amid concerns about carriers’ ability to maintain high rates. The early Lunar New Year and the threat of new tariffs supported higher rates on the back of increased freight volumes, but the approach of the holiday has weakened support for current price levels.
The GRI provided carriers with a hedging option: in October 2025, they could lock in rates at 1,750 basis points, 500 basis points above current levels (around $2,800 per FEU versus an expected $2,000 per FEU). However, the contract has lost more than 22% since early December and 5% since January 1.
A comparison of the 2024 and 2025 futures curves shows that price expectations are already 500 basis points lower than forecasts a year earlier. The maximum effect of the GRI temporarily raised long-term expectations, but then a steady decline began across all contract months.
Barring further significant disruptions to global supply chains, the futures market is forecasting further rate cuts. This could come as a relief to shippers after the high volatility of the past year.