Generally speaking, the third quarter is the traditional peak season for global marine container transportation. However, the sea freight market suffered a cold wave in the third quarter of this year, and the freight rates of major sea freight routes fell sharply. What is the reason?
The peak season of the shipping market is not strong
Some route freight rates fell by more than 80% from the highest point last year
The FBX index released by the Baltic Shipping Exchange shows that as of September 26, the average shipping price of FBX containers was US$4,029, which has fallen by 63.8% from the historical high in September last year. Among them, the freight rates of China/ Far East -North America West Coast routes fell 85.7% from the highest freight rate last year, the freight rates of China/Far East-North America East Coast routes fell 68.8%, and the freight rates of China/Far East-North Europe fell 53.2% from the highest point in January this year.
Industry insiders said that due to the breakdown of the supply chain due to the epidemic, many countries experienced a "stocking wave" last year, which also led to a sharp increase in shipping costs last year, which is an unsustainable state. This year, due to the increasing pressure on global economic inflation, demand began to decline, and a large number of new ships were launched, which intensified the gap between supply and demand.
Due to the decline in freight rates, many shipping companies have begun to suspend their flights one after another to change the situation of oversupply. Data released by the shipping consulting agency Drury showed that in the five weeks from September 19 to October 23, 122 flights were cancelled, with a cancellation rate of 16% in the 750 scheduled flights on major routes such as Trans-Pacific, Transatlantic Ocean, Asia-Nordic Europe and Asia- Mediterranean . Among them, the three major shipping alliances in the world have successively canceled 101 voyages.
Industry insiders said that although sea freight rates have plummeted, taking into account factors such as high global inflation and high oil prices, the current freight price is still within a reasonable range. The trend of the entire maritime market in the fourth quarter of this year and even next year remains to be seen.
Long-term contract agreement and spot freight rate inverted export companies to restart logistics plan negotiations
Last year, when sea freight prices remained high, in order to control logistics costs, many export companies in my country would choose to sign long-term contracts with shipping companies, hoping to obtain freight rates lower than the market. However, this year's shipping prices fell sharply, and the long-term contract agreement and spot freight rates were inverted. Many companies that signed long-term contracts began to hold a new round of negotiations with shipping companies to reduce freight rates.
In an LED lighting company in Nanshan District, Shenzhen, logistics manager Wang Hongjin was busy communicating with the shipping company about the new contract. She told reporters that at the beginning of each year they would sign a one-year contract with the shipping company at a price lower than the market at that time. However, what she never expected was that as the shipping price fell sharply this year, the price of the long contract they signed had a serious inversion with the market price, so she had to contact the shipping company to renegotiate and negotiate, hoping to fulfill the long contract at a new price.
Thankfully, although a long contract has been signed, the shipping company has taken into account that their company has a relatively large annual cargo volume and good historical performance, so the negotiation process is very smooth. The shipping company has also given a new plan that matches the market, and Wang Hongjin's logistics cost pressure has been alleviated. Another export company in Shenzhen, Xiao Qinghua, who has not troubled long-term contracts, is happy that the shipping prices have dropped this year.
General Manager of a Shenzhen electronic product export company Xiao Qinghua: For example, during peak shipping periods, the product freight costs may account for 60% of the total production cost of products. Now the shipping fee has returned to normal, and the product shipping fee may account for 10% of the product. Therefore, the return of sea freight costs to normal is very good news for manufacturing companies like us. Xiao Qinghua told reporters that as the shipping prices fell, the export orders of her company also increased by 30%.
(CCTV Finance)
