Recently, shipping companies have continued to cancel voyages from China to Northern Europe and the Western United States to slow down the decline in container spot freight rates.
However, despite the sharp increase in the number of empty flights, it seems to have little impact on shippers’ access to space, and the downward trend in freight rates has not been curbed.
The freight rate on the Asia-US West Coast route has plummeted from the high of US$20,000/FEU a year ago. Recently, a Shenzhen freight forwarder quoted: the freight rate for a 40-foot high container from Yantian, Shanghai or Ningbo to Los Angeles or Long Beach is US$1,850. , valid until mid-November, can be shipped through MSC, Maersk, ONE, Hapag-Lloyd or Yang Ming.
According to the latest data from major shipping indexes, the decline in US-Western freight rates has not slowed down, and the market continues to weaken, which indicates that the US-Western freight rates may drop to around US$1,500 in 2019 in the next few weeks. In fact, according to feedback, there is currently an offer of $1,500 in the market.
Analysis of the latest major freight indexes
Drewry’s World Container Freight Index (WCI) fell 7% in the latest week, falling for 35 consecutive weeks. It fell 67% from the same period last year. After consecutive weeks of double-digit losses, losses have narrowed since early October.
However, the 7% decline in this period was the largest decline in October. All major routes continued to fall across the board. The freight rate of the Shanghai-Rotterdam Nordic route fell sharply by 13%, while the Shanghai-Los Angeles freight rate fell further and has dropped by more than 81% from the peak in September 2021.
The latest Ningbo Export Container Freight Index (NCFI) released by the Ningbo Shipping Exchange closed at 1320.3 points, down 3.6% from the previous period.
Among the 21 routes, the freight index of 5 routes increased, and the freight index of 16 routes fell.
European routes: The overall transportation demand is sluggish, the remaining capacity is serious, and the booking price in the spot market has accelerated.
The European route freight index was 1328.9 points, down 15.1% from last week;
The freight index for the Didong route was 1364.0 points, down 11.2% from last week;
The freight index for the West-West route was 1633.6 points, down 6.7% from last week.
North American routes: The market is still in a state of oversupply, with freight rates maintaining a downward trend and freight rates continuing to reach new lows in the new year.
The freight index for the East Coast route was 1,655.1 points, down 9.8% from last week;
The freight index for the West Coast route was 959.9 points, down 5.2% from last week.
Middle East routes: Liner companies have reduced the available shipping capacity in the market through temporary suspension of sailings, combined sailings and other means. The supply of space on routes has been tight, and booking prices in the spot market have risen sharply.
The Middle East route index was 1853.8 points, an increase of 45.4% from last week.
In addition, the markets for the following routes are highly volatile:
Red Sea Route: Liner companies actively adopted capacity control measures to significantly reduce the market’s effective capacity, resulting in tight shipping capacity on the route and market booking prices rising by more than US$1,000/FEU in a single week.
The freight index of the Red Sea route was 2347.1 points, an increase of 44.9% from last week.
The latest container freight index SCFI released by the Shanghai Shipping Exchange reached 1,697.65 points, down 81.04 points or 4.56% on the week, falling for 19 consecutive weeks.
European route: The freight rate on the Shanghai to Europe route is 2,102 US dollars/TEU, a weekly decrease of 277 US dollars, or 11.64%; the Shanghai to Mediterranean route freight rate is 2,344 US dollars/TEU, a weekly decrease of 224 US dollars, or 8.72%.
North American route: The freight rate from Shanghai to the West Coast is US$1,902/FEU, down US$127 or 6.26% on the week;
Shanghai to US East US$5,318/FEU, down US$321 or 5.69% on the week.
The freight rate of the South American line (Santos) was US$4,541/TEU, down 518 yuan or 10.24% on the week;
Persian Gulf Line: This route has performed well recently, with overall cargo volume remaining stable. Some shipping companies continue to control the deployment of shipping capacity, supporting market freight rates to continue to rise in this period. The Persian Gulf line freight rate is US$1,727/TEU, a weekly increase of US$276, or 19.02%;
According to data released by research organization Markit, the initial value of the Markit Manufacturing PMI in the United States in October was 49.9, a new low since June 2020 and lower than market expectations. In this period, the performance of the North American route transportation market is not ideal, the growth of transportation demand is weak, the relationship between supply and demand has weakened, and the market freight rate has continued its downward trend.
In addition, the freight rate of the Persian Gulf line increased by 88.71% compared with the end of September due to the removal of a route by the Qatar World Cup and the Ocean Alliance, while the freight rate of the Southeast Asia line (Singapore) fell slightly by 1.7%.
The person in charge of a large freight forwarding company pointed out that the freight rates, which were slightly stable in the previous period, have increased in decline this period, mainly because the shipping companies are delivering large ships of 10,000-container class one after another.
At present, in addition to the obvious decrease in the volume of electronic products in the market, people’s daily necessities are actually increasing. The next two months will enter the off-season, and freight prices may continue to fall. It is estimated that there may be a chance to stop the decline around the first month of the Lunar New Year. Or even rebound.