The third quarter of each year is often the traditional peak season for sea transportation. European and American retailers and manufacturers usually book inventory and raw materials in advance to prepare for the Christmas holiday at the end of the year. However, this year's traditional shipping peak season, the global shipping industry seems to be somewhat "not prosperous".
It is reported that due to slowing demand and uncertain US economy, the high-priced freight contracts signed by shippers in the face of tight shipping capacity and eager to replenish inventory are now becoming "a piece of waste paper".
This is because The current shipping market in has shown that spot freight rates have fallen below long-term coupon price . Some traders are renegotiating with freight forwarders to modify their long-term shipping agreements at the peak of the pandemic's surge in freight demand, or simply turn to spot market freight to deliver goods.
The reduction in container freight rates is undoubtedly good news for manufacturers and retailers, and the sharp rise in shipping costs over the past two years has caused them to complain. This phenomenon also shows that the "outstanding" contribution of the freight industry to global high inflation has finally subsided. These are undoubtedly a huge shift – after the world faced severe delays and shortages in container shipping for most of 2021. How much has the shipping fee for containers dropped by
?
According to the FBX index released by the Baltic Shipping Exchange, as of last Friday, the average FBX container shipping price was $6,495, a drop of more than 41% from its all-time high in September last year.
Among them, the freight rate of the China/East Asia-North America West Coast route has fallen to US$7409; the freight rate of the China/East Asia-North America East Coast route has also fallen back to US$9882. However, due to the intensification of congestion in European ports, the freight rates for the China/East Asia-Nordic route and the Mediterranean shipping are still above US$10,000, at US$10,471 and US$12,439 respectively.
In addition to the FBX index, , which references the eight main routes of Asia, America, Asia, Europe and Europe as the reference, is also declining across the board. The WCI index fell further to $7050.94 last week and has now fallen for 19 consecutive weeks.
freight forwarding company Flexport, head of freight forwarding company , based in San Francisco, said the company is finding that more and more shippers are abandoning their previously signed long-term contracts in favor of lower freight rates on the spot market.
The head of a large U.S. import company said it has recently cut the rate of shipping contracts signed a few months ago by 15%-20%. The executive expects shipping rates to drop further later this year. He said, "The situation is moving in a direction that is beneficial to importers." According to Norwegian transportation data and procurement company Xeneta, the long-term contract price of goods shipped from China to west coast almost tripled between June 2021 and June 2022, reaching US$7,981 per TEU (FEU). However, spot freight rates began to fall in March this year and fell below the long-term contract price in June.
Is the sea transportation super loop over?
In the view of some industry insiders, the current super cycle of shipping may have ended, and freight rates are expected to fall further in the second half of the year. Many freight experts say that although there are many factors that are depressing shipping costs for sea and freight, weak demand is becoming a common phenomenon.
Last year, due to the severe impact of the epidemic situation, many US traders set off a wave of shopping supplies, and major retail supermarkets have also stepped up their stockings, resulting in a backlog of inventory, which has largely led to the decline in new orders today.
Data from the U.S. Department of Commerce shows that as Americans reduce their consumption of large items such as furniture and television, consumer goods imports fell by about $1.5 billion in May. In a report released by the National Retail Federation last Friday, the National Retail Federation also predicted that U.S. imports will decline from August to November compared to the same period last year.
While sea freight demand weakens, trucking in the United States has also seen a decline in freight rates. According to DAT Solutions LLC, the U.S. online freight market, spot prices for trucking fell 22% in the first six months of this year, and the price in May was once lower than the long-term contract price, the first time in two years.
However, Drewry also pointed out that spot freight rates should not plummet and collapse , because airlines will tighten and adjust effective supply to reduce fluctuations in spot freight rates. In the coming year, shipping companies will have to address the current weak spot freight rate below contract freight rates.
In fact, although container freight has dropped significantly at present, it is still far higher than the pre-epidemic level. According to data from online freight market Freightos, the spot price of shipping a container from China to the west coast of the United States on July 6 was still more than four times higher than the same period in July 2019. Shipping congestion has also led to high transportation costs on some routes.
Carbochem Inc., an activated carbon importer for water treatment and food processing, said Gavin Kahn, the company's president, that its cost of shipping goods from China to Chicago in June was $16,000 per standard container. That fee is down from the highest $21,000 last year, but it is still three times higher than what he paid before the pandemic.
He said, "We need to look for container freight rates that may be below $10,000, so that we can get close to our pre-epidemic levels and stay competitive."
This article comes from Cailianshe
