Global International Shipping Load Reduction Effect and Stable Freight Rates

The freight rate has ended three consecutive declines and achieved two consecutive increases! The latest Shanghai Container Export Freight Index (SCFI) has continued to rise again this period, following the previous period’s return to 1000 points. It is also the second consecutive week of rise, with the index reaching 1032.21 points, up 21.4 points, or 2.12%.Among the four major ocean routes, except for a slight decline in the US East, all others showed an increase, with the Far East to the Mediterranean showing the largest increase, reaching double-digit numbers. Specifically, the freight rates for European and Mediterranean routes have continued to rise, with increases of 8.7% and 10.07% respectively. The freight rates for the US West have slightly increased by 1.4%, while the freight rates for the US East have slightly decreased by 0.2%.The latest Deloitte World Container Freight Index (WCI) has increased by 6%, with freight rates from Shanghai to Europe and the Mediterranean both experiencing a significant increase of 15%. The global shipping industry continues to experience a reduction in cabin load, with prices stabilizing in the low months. The revenue and profits of shipping companies in the fourth quarter will also be affected and will decrease.sea freightSeveral freight forwarder practitioners have stated that European inventories are gradually correcting to healthy levels, coupled with shipping companies reducing shipping schedules and controlling cabins, some ships have already reached full capacity in mid December, driving freight rates up for two consecutive weeks. Previously, several shipping companies announced that they would increase their FAK rates on December 15th, and recently adjusted them to January 1st. However, the freight rates have surged again, with an increase of $300-500, which is 20% of the previous increase.Several shipping companies, including Maersk, DaFei, and Herbert, have announced that they will significantly increase the FAK rates for Asia to Nordic and Mediterranean routes starting from January 1, 2024According to overseas industry media reports, other shipping companies will follow suit and increase FAK rates by a similar amount in the coming days, in order to establish a solid financial foundation starting from 2024.During this period, an increasing number of shippers have reported that they are no longer able to book seats for December on shipping companies’ online booking platforms, mainly due to shipping companies attempting to squeeze the market by canceling approximately 40% of flights from China.Industry insiders point out that there is currently not much cargo volume on the market, and it is entirely up to shipping companies to reduce schedules and reduce cabins to stabilize freight rates. Relatively speaking, there has not been a significant increase in cargo volume on the US route. The US East has increased its control over cargo hold capacity, coupled with the Panama Canal blocking ports and bypassing the Suez Canal, effectively supporting freight rates. On the West Coast, last week there were no ships arriving at the port on the THE West Coast, and non alliance ships competed for goods, causing a volatile situation. At present, the US Southwest route is also reported to be full, and multiple shipping companies have issued price increase notices, with an increase of approximately $200-300 per 40 foot container.The industry expects that the volume of goods will gradually release at the end of the season and the end of the year. With the arrival of the Lunar New Year, manufacturers will rush to ship before the new year, which may help support freight rates.The latest SCFI fare index released:Although inflation levels in Europe have fallen, the tightening monetary policy of the European Central Bank has further increased the risk of economic stagnation in the future. The latest transportation demand remains stable, and shipping companies continue to control capacity investment during the signing season. The supply and demand fundamentals are relatively stable, and market freight rates continue to rise.The fare for the Far East to Europe route is $925/TEU, an increase of $74 or 8.7% compared to the previous period;The fare for the Far East to Mediterranean route is $1387/TEU, an increase of $127 or 10.07% compared to the previous period.The growth of ADP employment in the United States slowed down in November, while the salary growth rate cooled down, indicating signs of a slowdown in the job market and a possible lack of momentum for future economic recovery. The overall transportation demand for this period is stable, and the supply and demand relationship is basically balanced. The price trends of the US East and US West routes have diverged.The freight rate from the Far East to the West United States is $1669/FEU, an increase of $23 or 1.2% compared to the previous period;The freight rate from Far East to East America is $2441/FEU, a slight decrease of $5 or 0.2% compared to the previous period.Logistics practitioners stated that November and December were the two months with the weakest demand for containers, and airlines reduced their schedules and cargo space, reducing the impact of insufficient transportation volume; At present, the eastern United States has begun to be affected by the drought of the Panama Canal, and despite the inability to increase cargo volume in December, freight rates in the eastern United States are still supported.The freight rate per container on the Australia New Zealand route (Melbourne) is $915, a weekly decrease of $5, or 0.54%;The South American route (Santos) has a freight rate of $2483 per container, a weekly decrease of $95 or 3.69%.In terms of offshore routes, each TEU from the Far East to Kansai, Japan decreased by $3 compared to the previous week, to $301; The price per TEU from Far East to Kansai, Japan is $309, a decrease of $10; Each TEU from Far East to Southeast Asia and South Korea remained unchanged from last week, at $200 and $137 respectively.The latest published Deloitte WCI freight index:The latest Deloitte World Container Composite Index rose 6% this week, with freight rates from Shanghai to Rotterdam and Shanghai to Genoa both increasing by 15% to $1343/FEU and $1608/FEU, respectively. Similarly, the freight rate from Shanghai to New York increased by 7% to $184, reaching $2747/FEU. The freight rate from Shanghai to Los Angeles decreased by 2% to $32, slightly dropping to $1939/FEU.Deloitte predicts that spot rates on the east-west route will generally remain close to current levels in the coming weeks.However, overseas industry media believe that shipping companies may still have a long way to go to fulfill their wishes. We need to take a correct view of the significant increase in WCI Nordic and Mediterranean spot rates this week, as it only brings interest rates back to mid September levels

Share on Facebook Share on Twitter Share on Google

Leave A Reply