Industry insiders pointed out that inflation, epidemic lockdowns, and an increase in new ships, resulting in an increase in cabin space and a decrease in cargo volume, are the three key factors that have caused freight rates to continue to buck the trend during the traditional peak season.
Container freight prices fall for eight consecutive years
The Shanghai Shipping Exchange announced that the latest SCFI index continued to fall by 148.13 points to 3739.72 points, a decrease of 3.81%, falling for eight consecutive weeks.
Rewriting a new low since mid-June last year, the four major long-distance routes fell simultaneously, with the European route and the US-Western route expanding their declines, with weekly declines of 4.61% and 12.60% respectively.
The latest SCFI index shows:
•The freight rate per box from Shanghai to Europe is US$5,166, down US$250 or 3.81% on the week;
•Mediterranean line is US$5,971 per box, down US$119 on the week, down 1.99%;
•The freight rate per 40-foot container in the West Coast is US$6,499, down US$195 or 2.91% on the week;
•The freight rate per 40-foot container in the East US was US$9,330, down US$18 or 0.19% on the week.
•The freight rate per box of the South American line (Santos) is US$9,531, a weekly increase of US$92, or 0.97%.
•The freight rate per box on the Persian Gulf route was US$2,601/TEU, down 6.7% from the previous period.
•The freight rate of Southeast Asia line (Singapore) is US$846 per box, a weekly decrease of US$122, or 12.60%.
The Drewry World Containerized Index (WCI) has fallen for 22 consecutive weeks, with a decline of 2% expanding again over the past two weeks.
According to the Ningbo Shipping Exchange, the latest NCFI index closed at 2912.4 points, down 4.1% from last week.
The freight index of one of the 21 routes increased, and the freight index of 20 routes fell. Among the major ports along the “Maritime Silk Road”, the freight index of 1 port increased and the freight index of 15 ports decreased.
The key route index conditions are as follows:
•European and Mainland routes: The European and Mainland routes maintained an oversupply situation, and the market freight rates continued to fall, and the decline expanded.
•North American route: The freight index for the US East route was 3207.5 points, down 0.5% from last week; the freight index for the US West route was 3535.7 points, down 5.0% from last week.
•Middle East Routes: The Middle East Routes Index was 1988.9 points, down 9.8% from last week.
Analysts believe that as the epidemic prevention and control situation at home and abroad stabilizes, the steady decline in international shipping prices this year is reasonable.
The recent rapid decline is caused by the combination of factors such as improved shipping efficiency, lower domestic and foreign demand, falling international oil prices, and steady increase in shipping capacity.
Port congestion remains serious
In addition, port congestion persists. In May and June, European ports experienced congestion, and congestion on the West Coast of the United States did not ease significantly.
Due to workers’ strikes, high temperatures in summer and other factors, as of June 30, 36.2% of the world’s container ships were stranded in ports. The situation of blocked supply chains and limited shipping capacity still existed in the second quarter, which provided certain support for freight rates in the short term. Although spot freight rates have declined, they are still at a high level overall.
Container capacity on trade routes from the Far East to the United States continues to shift from west to east, with U.S. East Coast ports handling an increase in container volume this year. This shift has led to congestion at East Coast ports.
George Griffiths, editor-in-chief of global container freight for S&P Global Commodities, said that East Coast ports remain congested, and the Port of Savannah is under pressure from large cargo imports and ship delays.
However, there is still a port congestion situation in the West United States due to truck driver protests, which has caused some cargo owners to redirect their goods to the East United States. Supply chain bottlenecks still help maintain freight rates at relatively high levels.
The number of ships waiting at North American ports exceeded 150 in late July, according to an American Shipper survey of marine traffic and queued ship data. This number fluctuates daily and is currently down 15% from its peak, but remains historically high.
As of the morning of August 8, a total of 130 ships were waiting outside the port, of which 71% were in ports on the East Coast and Gulf Coast, while those on the West Coast dropped to 29%.
Data shows that there are 19 ships waiting to berth outside the Port of New York-New Jersey, while at the Port of Savannah, the number of ships waiting to berth has surged to more than 40. These two ports are the first and second largest ports on the East Coast respectively.
Congestion at US-Western ports has eased compared with the peak period, and the on-time rate has also improved, reaching the highest level (24.8%) in more than a year. In addition, the average ship delay time is 9.9 days, which is higher than the 9 days on the East Coast.
Maersk Chief Financial Officer Patrick Jany said freight rates may fall in the coming months. When freight rates stop their downward trend, they will stabilize at a higher level than before the epidemic.flat.
Detlef Trefzger, CEO of Kuehne Nagel, predicts that freight rates will eventually stabilize at 2 to 3 times pre-pandemic levels.
Mason’s Cox said that spot freight rates are adjusting slowly and orderly and will not fall off a cliff, and liner companies will continue to invest all or nearly full capacity on the routes.