Container ship freight rates are still in a downward trend. The decline in the Shanghai Export Container Freight Index (SCFI) expanded again last week. Whether it can hold 900 points this week has become the focus of market attention.
Freight prices fall for ninth consecutive year
Container ship market decline continues to expand
According to the latest data released by the Shanghai Shipping Exchange on March 10, the Shanghai Export Container Freight Index (SCFI) fell 24.53 points to 906.55 points last week, a weekly decrease of 2.63%.
Not only has it fallen for nine consecutive weeks, but it has also been below the 1,000-point mark for five consecutive weeks. The decline has also been significantly expanded from the 1.65% in the previous week.
Last week, the freight rate per FEU from the Far East to the US West fell by US$37 to US$1,163, a decrease of 3.08%, which expanded from the previous week’s decrease of 2.76%.
What currently worries the industry is that the US East Coast route has begun to make up for the decline. The freight rate per FEU from the Far East to the US Eastern Line fell by US$127 to US$2,194 on a week-to-week basis, and the decline expanded from 2.93% in the previous week to 5.47%.
Industry insiders said that freight rates in the US-West have basically reached the bottom, while freight rates in the US-East still have room to decline compared with before the epidemic.
In addition, the freight rate per TEU on the Far East to Mediterranean line fell by US$11 to US$1,589, a decrease of 0.69%, which was slightly larger than the 0.31% decrease in the previous week.
However, the freight rate per TEU from the Far East to Europe was US$865, which was the same as the previous week.
South America Line (Santos): Transportation demand lacks momentum for further growth, resulting in weakening supply and demand fundamentals, and freight rates have been on a downward trend recently. The freight rate from Shanghai to the basic port in South America was US$1,378/TEU, down US$104 or 7.02% on the week;
Persian Gulf route: The transportation market has been relatively sluggish recently, with sluggish growth in transportation demand, poor supply and demand, and market freight rates continuing to fall. The market freight rate from Shanghai to the basic port of the Persian Gulf is US$878/TEU, down 9.0% from the previous issue.
Australia-New Zealand route: The local market demand for various materials has been hovering at a low level after the long holiday. Transportation demand has recovered slowly, supply and demand fundamentals are weak, and market freight rates continue to adjust. The freight rate from Shanghai to Australia and New Zealand basic ports is US$280/TEU, down 16.2% from the previous issue.
In terms of the near-ocean line, the freight rate from the Far East to Japan’s Kansai and Kanto remained the same as the previous week; the freight rate from the Far East to Southeast Asia (Singapore) per box was US$177, an increase of US$3, or 1.69%, from the previous week; as for the Far East to South Korea, it was higher than that of the previous week. It fell $2 the previous week.
Industry insiders pointed out that container shipping companies are actively adjusting shipping capacity, and Asian factories have begun to slightly pick up shipping momentum after the year. By the end of March, many container ships on the European line have become full, which will help stabilize freight rates;
However, the inflationary pressure in the United States is high, retailers and importers are conservative in purchasing goods, and the freight rates on the U.S. East Route are relatively high, attracting ships from all over the country, causing the U.S. East Route freight rates to make up for the decline, and the decline expanded last week.
While spot freight rates are plunging, the new one-year long-term freight rates on the U.S. line are said to have been cut to one-third of last year. However, some container shipping companies have changed annual contracts to quarterly or semi-annual contracts to reduce the impact on freight rates. . In addition, container shipping companies have recently been frantically reducing shifts to lengthen shipping distances, and cargo owners have softened their attitude towards price bargaining, which will also help alleviate freight rate pressure.
Experts said that freight rates are expected to fluctuate at low levels this year. Currently, freight rates have fallen to around the cost price of container shipping companies, and the room for further declines should be limited. However, the time to reach the bottom is indeed longer than expected.
Despite this, experts also remind that the demand side is still the Achilles heel of the container shipping market. Even if the elimination of old ships is accelerated, the supply side is no longer congested and a large number of new ships are delivered for operation, resulting in a surge in global shipping capacity of more than 20%.
Alphaliner data shows that as of February 1, the total number of global container ship orders held was 7.69 million TEU, slightly less than 30% of the active fleet capacity; of which, 2.48 million TEU (32%) will be delivered this year, and 295 will be delivered in 2024. 10,000 TEU (38%), and 2.26 million TEU (30%) will be delivered later.
Will shipping companies increase prices in April?
Market news also shows that in the past week, due to capacity reduction factors, the European line has experienced cabin explosions in some markets. Shipping companies are expected to start raising freight rates in April. The industry estimates that the increase will be up to US$200 per large box, but whether it can Success remains to be seen.
In addition, some large freight forwarding companies pointed out that in addition to European routes, some markets to the U.S. Gulf of Mexico, including Houston, Mobile, Kansas, etc., are experiencing cabin explosions. Shipping companies have plans to increase prices in April, but whether they can Success also depends on the subsequent reduction of shipping companies and whether the cargo load increases.
In addition, cabin explosions also occurred on the Southeast Asia line. Due to shipping schedule adjustments and other reasons, some domestic ports to Indonesia, Thailand and Vietnam experienced serious cargo shortages from the end of February to March, and prices continued to rise slightly. Shipping experts analyzed this and said that the surge in cargo volume on some routes may be related to holiday factors such as Ramadan. Whether it can continue in the future remains to be seen.
</p
