collection freight rates have not seen any signs of stopping decline so far. The Shanghai Export Container Freight Index (SCFI) fell below 2,000 points in the last week of September, down 16 consecutive weeks.
According to data released by the Shanghai Aviation Exchange on September 30, the latest SCFI index fell 149.09 points to 1922.95 points, a weekly decline of 7.2%, and a monthly decline of as high as 39%. Since September, the SCFI index has fallen sharply weekly, with the four major ocean lines falling sharply across the board, among which the US Western Line and the European Line have fallen below the US$3,000 level, and all goods in Asia have declined.
As of September 30, the freight rate per FEU of Shanghai to the Western Conference fell by $285 to $2,399, a weekly decline of 10.61%, and a drop of 53% in September; the freight rate per FIU on the Eastern Conference fell by $379 to $6,159, a weekly decline of 5.79%, and a monthly decline of 30.02%.
European Line freight rate fell 213 US dollars to 2950 US dollars, down 6.73% weekly and 33.57% monthly; Mediterranean Line freight rate fell 250 US dollars to 2999 US dollars, down 7.69% weekly and 40.08% monthly. Southeast Asia Line Singapore waypoint freight rate fell by $38 to $348, down 9.8% weekly.
Industry insiders pointed out that global inflation and currency tightening have led to a sudden freezing of international transportation demand. The downward revision of freight rates is expected, but the decline is even greater than market expectations. The SCFI index has revised down 63% from its high at the beginning of the year and has now fallen back to the level of the fourth quarter of 2020. The shipping market has also flipped the seller market from the seller market .
In order to stabilize freight rates, the shipping company currently rescues itself and adopts the "three reduction policies" of significantly reducing shifts, cabin reduction and speed reduction externally. A large shipping alliance has already drawn ships on its own, and the US Western Line ships have been reduced from one shift per week to one shift per week; internally, "red-word management" is implemented, and it is better to lower prices and grab goods, and carry goods without losing money as the bottom line, thereby maintaining market share and customer relationships.
It is understood that the cost price per FEU of the US West Front is about US$1,500-1,800, and small and medium-sized ships are about US$2,000-25,000. Judging from the current SCFI index, the US West Front has fallen into a cost-price defense war, and large transportation companies mainly rely on the ideal US East and European lines that are still profitable.
Looking forward to the future, industry insiders believe that North American destocking has been basically completed, but market buying has not yet been recovered, China's export volume has decreased, freight rates have continued to fall, and the global is pessimistic about the trend of market economy ; the shipping industry is still looking forward to the small shipment wave before Christmas and the Spring Festival. Large North American retailers have begun to negotiate order demand in the next six months, and estimated that the demand for replenishing inventory has begun to be released.
Maersk CEO Shi Suoren expects that maritime volume will remain flat or decline this year. Even if ports and global supply chains are still partially blocked, the freight rate will decline with the decrease in freight demand. In order to save fuel costs, Maersk will start to slow down the navigation speed of the container ship . However, regarding Christmas purchasing opportunities, Shi Suoren admitted that the trade volume before the holiday this year was lower than before, and it was estimated that there was only moderate growth.
In addition, some industry insiders pointed out that although the SCFI index has not shown any signs of stopping decline, freight rates have risen in the past two years in the past 90 weeks, and freight rates are still far higher than in 2020. The US consumption power is also increasing slightly and residential demand is also strong. It is expected that freight rates will have a chance to return to rationality after consolidation.
