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Container freight rates continued to decline. Will it return to the normal level?

Time:2022-10-25 Publisher:Kevin Num:2611

Just like the concern about the sharp rise of freight rates before the epidemic, shippers are also very concerned about the sharp drop of container freight rates today. 

The freight rates of all major routes in the world have declined to varying degrees, with the Asia US West Coast route being the most serious.

Judah Levine, research director of Freightos, said that since April this year, the container freight rate from Asia to the west coast of North America has dropped 67%, while the freight rate to the east coast is 66% lower than the same period last year.

He pointed out that it was two years ago that the last time interest rates hit the bottom to the current level, when interest rates began to rise sharply during the pandemic in June 2020.

He said that strong consumer demand and port congestion were the main reasons for the price boom, which led to the peak of freight rates in 2021 being 10 times higher than in 2019.

According to its global container freight index, the current container freight from China to the Pacific coast is about 2700 dollars.

As the market entered the post epidemic era, the high freight costs began to fall back. He said that the decline in container prices is inseparable from consumer demand, but the decline in consumer demand may bring downward pressure on interest rates.

It is expected that by the end of 2022, the import volume of major container ports in the United States will hit a new low, dropping to the lowest level in nearly two years.

Some industry insiders predict that freight rates may fall below the break even point, which means that carriers may transport containers at a loss. 

However, it is clear that even if the demand declines, the challenges of the supply chain still exist, and the interruption and port congestion have not been completely relieved.

After nearly two years of port congestion and container shortage in the market, the interruption of the supply chain has also eased due to weak global demand and slowing import and export.

With the sharp reduction of ship waiting time, the reduction of port capacity and the faster turnover of containers, the port is no longer so congested, and finally released the market capacity.

Due to the epidemic, the freight rates, which once skyrocketed to sky high prices, also began to plummet, and the volume of container freight between Asia and the United States also plummeted.

GLA once again reminds the freight forwarders and shippers that if you have a demand for shipment during this period, you can contact our members first to get a better quotation.

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