DrewryDrewry pointed out that weak demand caused by a series of macroeconomic and geopolitical headwinds is affecting the global container shipping market. On June 30, Drewry's Composite World Container Index showed a 3% decline this week to $7,066.03 per 40-foot container. It is worth noting that spot freight rates on major routes fell overall for the first time.
Shipping companies have had mixed reactions to this. Among the three major alliances, CMA CGM announced that it will reduce the sea freight for imported containers from France to help slow down inflation; 2M and others have successively canceled multiple routes and chosen to increase "stop sailings and jump to ports" to maintain spot market freight rates. ZIM announces port hopping plans for several sailings due to port congestion.
The third quarter is the traditional peak season for the shipping market. However, due to many uncertain factors such as inflation, port congestion, rising energy and raw material prices, and declining demand, the actual freight rate and cargo volume trends may not stabilize until mid-to-late July. clear.
CMA CGM reduces import sea freight: 500 euros/40-foot container
France's inflation rate climbed further to a record high in June from the previous month, Insee statistics agency said that sharp rises in energy and food costs pushed consumer prices from May grew from 5.8% to 6.5% in .
CMA CGM issued a statement saying that after consultation with the Ministry of Economy, Finance, Industry and Digital Sovereignty, CMA CGM Group decided to take targeted measures to contribute to lowering consumer prices for French families.
Source: CMA CGM
Specific measures include:
. Reducing shipping costs by €500/40FEU for all goods imported by major French retailers
For consumer goods imported through French ports CMA CGM will offer its retail customers per 40-foot container 500€ fee discount. This measure means that sea freight has been reduced by nearly 10%. CMA CGM also stated that in order to maximize the impact and ensure effective reduction of consumer product prices, this measure must be implemented together with these brands.
. For all goods imported into French overseas territories, the freight charges for a 40-foot container can be reduced by up to 500 euros . This measure is equivalent to a 10%-20% freight reduction, depending on the destination. CMA CGM said in a statement that the above measures will be implemented from August 1, 2022 and will be valid for one year. In addition, CMA CGM called on retail chains to pass on the reduced prices to consumers.
European and American demand fell, spot freight rates fell
html On June 30, Drewry's Comprehensive World Container Index showed that this week fell 3% to US$7,066.03 per FEU. Drewry expects the index to continue to decline in the coming weeks.
Source: drawry
Among them, the Shanghai-Los Angeles freight rate fell by 4% to US$7,652 per FEU; the spot freight rate of Shanghai- Rotterdam fell by 4% to US$9,240 per FEU. Likewise, Shanghai-Genoa and Shanghai-New York spot rates fell 2% each to $10,884 and $10,154 per FEU respectively.
Source: drawry
In addition, according to data released by the Shanghai Shipping Exchange last week, the Shanghai Export Container Freight Index (SCFI) index fell for two consecutive weeks, falling 5.83 points last week to 4216.13 points, a decrease of 0.13%. Freight rates on the three major ocean routes continued to adjust, with the US East Line falling by 2.67%, the first time it fell below the US$10,000 mark since the end of July last year.
The three major alliances have canceled 11% of their routes, focusing on the Asia-US West route
In terms of demand, the conflict between Russia and Ukraine continues, the rapid growth of inflation and the increase in the cost of living have weakened the overall demand of the European economies.Since domestic retailers in the United States have replenished inventory too quickly since the first quarter, the current absolute inventory level has reached or exceeded the pre-epidemic level. In response, many shipping companies have taken measures to adjust voyages and jump to ports to stabilize freight rates.
Source: drawry
According to the latest data released by Drewry last Friday, in the next 5 weeks (weeks 27-31, covering the entire month of July), major markets such as trans-Pacific, trans-Atlantic, Asia-Europe and Mediterranean Among the 760 scheduled routes, 86 have been cancelled, accounting for 11% of the total planned routes. Among them, 66% of the canceled routes are in the eastbound direction of the trans-Pacific, that is, the Asia-Western America route.
The three major alliances have canceled a total of 61 voyages, of which M has announced the cancellation of 23 voyages, followed by the Alliance and Ocean Alliance, which have canceled 23 and 15 voyages respectively.
Source: drawry
In addition to the three major alliances, shipping company ZIM recently issued announcements on its official website to cancel port call plans for multiple voyages, due to route cancellations and port congestion.
Due to the gradual cancellation of the ZGX route, the ZGX-WIDE INDIA 9W voyage has canceled its call at Yantian Port and is expected to unload at Busan Westbound on July 14. Due to port congestion, ZCP and ZIM WILMINGTON 7E have canceled their call at Ningbo Port , and are expected to unload at Busan Eastbound on July 15; ZCP and ZIM HONG KONG 17E have canceled their call at Shanghai Port , and the relevant goods are expected to be unloaded at Busan Eastbound on July 20. Eastbound unloaded.
Source: ZIM
While shipping companies suspended sailings and jumped to ports, the backlog of goods at ports continued to plague North America and Europe, affecting the timeliness of container transportation. Obviously, these abnormal market conditions will take some time to return to normal and will have an impact on transportation efficiency.
Terminals, trucks, containers... The congestion problem in European and American ports is hard to come back.
Last month, Germany's largest port Hamburg held its first strike in 30 years. Industry insiders pointed out that after this strike action around the issue of wage increases, The consequences of the congestion are so serious that it will take at least three months to clear the backlog of goods at the port.
According to the supply chain heat map of CNBC, most trade channels in the European port system, including Liverpool, Felixstowe, Rotterdam, Antwerp, Birmingham, Hamburg and other European port systems, are blocked to varying degrees, from ships Period reliability, vessel berth times, trucking efficiency to container availability and handling efficiency are all affected.
Source: CNBC Supply Chain Heat Map
In addition, The labor negotiations for dock workers at the West American Port failed to reach any agreement before the original contract expired on July 1. The union rejected the employer’s call to extend the contract , but both parties promised to Keep the movement of goods uninterrupted until an agreement is reached.
In view of the increase in container imports during the traditional peak season, the market is generally concerned about logistics delays. Many shippers have been diverting cargo to Eastern and Gulf Coast ports to avoid possible delays caused by labor negotiations. Because of this, some ports, including the Port of New York/New Jersey, are currently experiencing severe congestion and ship backlogs.
Delays have forced U.S. importers to book shipping dates four to five weeks in advance. Railway congestion has also caused a misalignment of container supply and demand, affecting the availability of containers. The mismatch between supply and demand for containers is one of the reasons for the increase in rates during the epidemic, and this may happen again.
The third quarter is the traditional peak season for freight. What do you think the freight rate and cargo volume trends will be this year? Welcome to leave a message in the comment area to participate in the discussion.
Source: freightwaves, cma-cgm, drawry, etc.
