According to the Zhixin Finance and Economics app, shipping stocks continued to decline as of the time of publication. Orient Overseas International (00316) fell by 4.89% to HKD 108.8; Sitc International (01308) fell by 2.74% to HKD 18.48; Cosco Shipping Holdings (01919) fell by 1.58% to HKD 11.22; and Pacific Basin (02343) fell by 1.24% to HKD 2.39.

On the news front, geopolitical easing has driven recent freight rate declines. Market optimism about the prospects for a new round of talks between Israel and Palestine has raised concerns about the return of the Red Sea passage, leading to futures and spot price corrections for European and American routes. On July 12th, the Shanghai Shipping Exchange's Shanghai Export Container Comprehensive Freight Index was 3674.86, down 1.6% from the previous period, ending the previous 13-week upward trend. Shanghai's export tariffs to the US East Coast fell 0.6% last week, and tariffs to the US West Coast fell 5.5%.

In addition, a research report by Morgan Stanley pointed out that the Red Sea conflict temporarily delayed the industry's downturn cycle, but its impact is beginning to weaken, and supply risks are now accumulating. Since the industry peaked in 2021, industry capacity has increased by 19% as of mid-year, and the bank estimates that capacity will increase by another 10% by the end of next year. International trade only rises by 3% to 4% annually, meaning that this year's peak spot freight rates will be seen in the coming peak season over the next two to three years. The bank estimates that during the upcoming downturn cycle, the industry will return to a break-even or even loss state.