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Container freight rates fell for several consecutive weeks. Is it expected to return to the pre epidemic level?

Time:2022-11-01 Publisher:Kevin Num:2680

With the weakening of the global economy, the latest report indicates that container freight rates may fall back to or below the level before the outbreak in 2019.

According to the World Container Index released by Drury on October 28, the WCI showed that the average freight rate this week was 3145 US dollars/FEU, a drop of 7% compared with last week. This is the 35 consecutive weeks of decline of the index.

Compared with the same period last year, freight rates have dropped by 67%. However, Deluli predicted that the month on month decrease in spot freight rates would narrow in the coming weeks.

According to the latest research report of HSBC, according to the current decline rate of spot freight rates, the freight rates may fall to the level of 2019 at the end of this year at the earliest, while the previously predicted time point is the middle of 2023.

On the other hand, the shipping company continued to cancel the voyages from China to Northern Europe and the West America to slow down the decline of freight rates. 

However, despite the cancellation of several voyages, the market is still in a state of oversupply, and spot freight rates continue to fall.

The freight rate of the route from Asia to the West Coast of the United States has plummeted from a high of $20,000/FEU a year ago to $1850, which is valid until the middle of November.

According to the analysis, according to the latest data of each freight index, the freight rate of the U.S. - Spain route still maintains a downward trend, and the market continues to weaken, which means that the freight rate of this route may fall to the level of about 1500 dollars in 2019 in the next few weeks.

Some industry insiders pointed out that the slowdown in demand and the oversupply of containers were both caused by the global pandemic, and the current situation is not unpredictable. 

With the easing of congestion, the backlog of ships at the port has decreased, the transport capacity has been improved, and the freight rate has gradually dropped.

In fact, many ports in Asia have experienced a similar drop in freight rates. According to the data of Container x Change, the average price from Ho Chi Minh Port to the United States (20 feet) has dropped from $321 to $117.

Although similar situations have occurred in ports in India and Vietnam, freight rates have stabilized in the past two months.

The freight rate of European containers also showed signs of sharp decline due to oversupply. On the other hand, driven by the increased demand of shippers, the freight from China to the East Coast of the United States dropped significantly.

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