Hard landing of freight rates! The European route has fallen to $1000 per box, and most routes have not shown any signs of bottoming out yet.
Recently, the spot freight rate of the European line has dropped significantly. According to the Ningbo Shipping Exchange, the average freight index of European routes fell 46.3 percent in November compared with October, and was down 84.2 percent year-on-year. The Asia-Nordic portion of the Drury World Container Index (WCI) fell another 10% last week to $1,965 /FEU and has halved in the past four weeks.
Recently, the spot freight rate of the European line has dropped significantly. According to the Ningbo Shipping Exchange, the average freight index of European routes fell 46.3 percent in November compared with October, and was down 84.2 percent year-on-year. The Asia-Nordic portion of the Drury World Container Index (WCI) fell another 10% last week to $1,965 /FEU and has halved in the past four weeks.
"The cliff drop in freight rates shows there is more competition in the market than many feared." Patrik Berglund, CEO of rate tracker Xeneta, said recently.
Spot freight rates on some trade routes fell at a slower pace in October than in August and September. However, in November, spot rates on some routes fell sharply again. In most trade routes, there are no signs of a market bottom.
Recently, the spot freight rate of the European line has dropped significantly. According to the Ningbo Shipping Exchange, the average freight index of European routes fell 46.3 percent in November compared with October, and was down 84.2 percent year-on-year. The Asia-Nordic portion of the Drury World Container Index (WCI) fell another 10% last week to $1,965 /FEU and has halved in the past four weeks.
While WCI spot rates have fallen below the $2,000 watershed, Loadstar said it received an unsolicited offer from a Chinese freight forwarding company last week to ship from all major Chinese ports to the UK ports of Felixstowe, Southampton and London Gateway at $1,000 per 40ft container.
According to Lars Jensen, CEO of Vespucci Maritime, the liner market is officially experiencing a "hard landing" and the Chinese Lunar New Year, which starts on January 22, is the only light at the end of the tunnel. "What the market is doing is spot rates bottoming out after the Chinese New Year."
The consultant said that if the global recession is mild and inventory adjustments are the main driver of the slump in demand, there could be a surge in shipments next summer, causing spot rates to rise again.
But if the recession becomes deeper and more protracted, Jensen believes demand will be subdued next year, with a surge in goods only coming before the Chinese New Year in 2024.
"In either case, the price collapse will cause a lot of operational disruption in the coming months as shipping companies continue to cancel a lot of voyages to stop rates from falling," Mr Jensen said.
According to the latest data released by the Shanghai Shipping Exchange, on December 2, the Shanghai export Container Freight Index (SCFI) composite index was 1,171.36 points, down 4.8% from the previous period.
• European routes: Shanghai to Europe freight (sea and sea surcharge) was US $1,085 /TEU, down 1.4% week on week; Freight from Shanghai to the Mediterranean market was $1,827 /TEU, down 0.8% week on week;
• North American route: Shanghai to West America market freight was 1,437 US dollars /FEU, down 3.9% week; Freight from Shanghai to the eastern US market was 3,437 US dollars /FEU, down 6.8% week on week;
• South America route: Shanghai to South America market freight is 2,025 US dollars /TEU, down 11% week;
• Persian Gulf route: Shanghai to Persian Gulf market freight was 1,184 US dollars /TEU, down 5.3% week on week;
• Australia and New Zealand routes: Shanghai to Persian Gulf market freight at US $602 /TEU, down 1.8% weekly.
According to Drewry's latest flight cancellation tracking data, across major routes such as Trans-Pacific, Trans-Atlantic and Asia to Northern Europe and the Mediterranean, 96 out of 730 scheduled flights were cancelled between Week 49 and week 1 of 2023. Fifty-four percent of the blank voyages will occur on trans-Pacific eastbound routes, 29 percent on Asia-Europe and Mediterranean routes, and 17 percent on trans-Atlantic westbound routes. (Click to check the shipping date)
During this period, THE three major alliances cancelled a total of 74 voyages, of which 46.5 were announced by The Alliance, 21.5 by the Ocean Alliance and 6 by the 2M Alliance. In addition, there were 22 blank voyages in non-alliance service.
Drury commented that the shipping industry continues to recover towards pre-pandemic levels, exacerbated by weak demand and easing port congestion, especially at mid-sized ports in North America. After a weak season in 2022 and a highly volatile market situation, the market next year may also face major challenges brought about by excess capacity and declining freight volumes. In January 2023, the effective capacity of major East-West trade routes will increase by 12% year-on-year. To keep capacity in line with demand, shipping companies are expected to continue to suspend services and announce air flights.
