Flame retardant fabric_Flame retardant fabric_Cotton flame retardant fabric_Flame retardant fabric information platform Flame-retardant Fabric News Freight prices have fallen for 17 consecutive weeks, and freight rates may fall to pre-epidemic levels by the end of the year

Freight prices have fallen for 17 consecutive weeks, and freight rates may fall to pre-epidemic levels by the end of the year

A large amount of new shipping capacity has been delivered, but market demand is constantly decreasing. The peak season during the National Day Golden Week is not busy, and freight…

A large amount of new shipping capacity has been delivered, but market demand is constantly decreasing. The peak season during the National Day Golden Week is not busy, and freight rates continue to fall.

Freight prices fell for 17 consecutive weeks

According to data released by the Shanghai Aviation Exchange, the SCFI index fell 108.95 points to 1814 points in the latest issue (10.14), a drop of 5.7%, and a drop of 65% from the high point at the beginning of the year.

Freight rates for the four major routes in Europe and the United States have plummeted. Among them, the US-Western Line and the European Line have fallen by more than 12% in a single week, and have fallen by 74% and 67% respectively from their peaks.

Last week, the freight rate per FEU on the US West Line fell by US$302 to US$2,097, a decrease of 12.5%;

The US East Line fell by US$343 per FEU, falling from 6,000 yuan to US$5,816, a decrease of 5.6%.

The European line fell by US$369 to US$2,581 per TEU, a decrease of 12.5%;

The Mediterranean line fell by US$252 to US$2,747 per TEU, a decrease of 8.4%.

The freight rate per TEU on the South American line (Santos) increased by US$95 to US$5,120, an increase of 1.89%;

The freight rate per TEU on the Persian Gulf line increased by US$295 to US$1,171, an increase of 28.40%.

Industry analysts pointed out that although the SCFI index has fallen for 17 consecutive weeks, last week’s decline did not increase due to the Golden Week. Instead, it was narrower than the average weekly decline of nearly 10% in previous weeks.

Freight rates on routes such as the Persian Gulf and South America have rebounded, and freight rates on Asian routes have also stabilized. It is estimated that freight rates on European and American routes will not fall too much in the fourth quarter during the off-season, while Asian routes will be supported during the peak season.

Affected by factors such as interest rate hikes, inflation, war, and epidemics, consumer confidence has slowed down rapidly in Europe and the United States. However, while transportation demand has declined, a large amount of shipping capacity has been released in the market, mainly due to the easing of port congestion and the launch of new ships. Currently, there is congestion. The problem has been alleviated by half compared to the beginning of the year, which means that freight rates will soon return to normalization.

Freight rates may drop to pre-epidemic levels by the end of the year

The latest research report from HSBC stated that due to a faster-than-expected decline in freight rates and the easing of port congestion, container shipping spot freight rates may fall to 2019 freight levels as early as the end of this year.

On Wednesday, the global bank lowered its demand forecast for 2023 and raised its capacity supply forecast for 2022-2024 to reflect that easing port congestion is releasing tied-up capacity into the market.

“As a result, we now expect the Shanghai Container Freight Index (SCFI) to bottom in mid-2023 and shipping industry profitability to bottom in the second half of 2023.” Parash Jain, head of shipping, ports and Asia transport research at HSBC Global Container Shipping Report wrote. It previously predicted that sea freight rates would bottom out in 2024.

With freight rates falling so sharply, HSBC reports that there are “significant downside risks” to shipping lines’ profit levels over the next two years. The bank expects shipping companies’ profits to remain resilient in the third quarter of this year, but will fall starting in the fourth quarter and continue into 2023.

Shipping company: I didn’t expect to earn more this year

“Spring turns to autumn and winter comes again. Freight prices will never end. Whether they are high or low depends on supply and demand. Prices will go down as supply and demand increase. We can only expect inflation to slow down and the decline to stop and reverse.” Evergreen Shipping Co., Ltd. Manager Xie Huiquan used a poem to describe his views on the shipping market.

Xie Huiquan said recently that the market originally thought that 2021 would be the peak of the container shipping industry, but he did not expect that profits would be better this year. The overall market revenue performance in the first half of this year was very impressive, and it can be said to be the best half year in history.

Faced with falling freight rates and reduced demand, Xie Huiquan believes that the container shipping market is returning to normal after three years of madness, but the future outlook is not pessimistic.

However, affected by the rise of the US dollar, high inflation and the war between Russia and Ukraine, the traditional peak season performance in the third quarter was mediocre, and revenue also declined compared with the previous two quarters. Revenue in the fourth quarter is expected to continue to decline. Although the performance in the third and fourth quarters was not as good as originally expected, the results for the whole year are still good, and may even be better than last year.

Looking forward to next year, Xie Huiquan said that the quality of the container shipping market still depends on the supply and demand situation. The demand side depends on the US dollar, inflation and the evolution of the Russia-Ukraine war. However, the global economy is currently expected to maintain positive growth. The International Monetary Fund (IMF) GDP growth rate next year is forecast to be 2.7%;

As for the supply side, new ship deliveries are expected to grow by 8.2%, and the easing of port congestion can release 5-7% of shipping capacity. However, new carbon emission regulations may take effect next year and may absorb 10% of shipping capacity.

Moreover, 8.2% of new ship deliveries are not achieved in one step, so the actual increase in supply is not that serious. Therefore, we have a relatively conservative view of the market in 2023, but we are not pessimistic.

Analysts say that the current freight rates on the European and American lines are still above the cost price, and major container shipping companies can still make profits. However, many container shipping companies or small ships that charter ships at high prices may face a turning point of losses, especially on the West-U.S. line.

On the other hand, the three shipping alliances are also capable of regulating transport capacity. The world’s top ten container shipping companies control 85% of the market’s transport capacity and can further control the supply of transport capacity by pumping out ships and reducing shifts.

In response to the sharp drop in freight demand and falling freight rates from the Far East to North America, the top twoShipping giants Mediterranean Shipping Company and Maersk Line have announced the closure of certain route services.

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