new capacity has been delivered in large quantities, but market demand is constantly decreasing. The peak season of the National Day Golden Week is not strong, and freight rates continue to fall.
freight rate fell for 17 weeks
According to data released by the Shanghai Aviation Exchange, the latest period (10.14) SCFI index fell 108.95 points to 1814 points , fell 5.7% , and fell 65% from the high at the beginning of the year.
Freight rates for the four major routes in Europe and the United States fell directly, among which the US Western Line and European Line fell by more than 12% in a single week, down 74% and 67% respectively from the highs.
Last week, US Western Front per FEU freight rate fell 302 US dollars to 2097 US dollars , fell 12.5% ;
US Eastern Front fell 343 US FEU, falling below 6,000 yuan to 5816 US dollars , a drop of 5.6%.
European line fell $369 per TEU to 2581 , , fell 12.5% ;
Mediterranean line fell $252 per TEU to $2747, a drop of 8.4%.
South American line (Santos) freight rate per TEU rose $95 to 5120 , increased by 1.89% ;
Persian Gulf line freight rate per TEU rose $295 to 1171 , rose by 28.40% .
Industry analysis pointed out that although the SCFI index has fallen for 17 consecutive weeks, the decline last week did not increase due to the golden week, but narrowed from the average weekly decline of nearly 10% in the previous few weeks.
Persian Gulf and South America routes rebounded , and Asian freight rates have also stabilized. It is estimated that the freight rates of European and American off-seasons will not fall much in the fourth quarter, and the Asian peak season will be supported.
is affected by factors such as interest rate hikes, inflation, war, and the epidemic. Demand in Europe and the United States has slowed down rapidly, but while transportation demand is declining, a large amount of transportation capacity has been released in the market. mainly comes from the ease of Port Serbia and the launch of new ships one after another. The current congestion problem has eased by half compared with the beginning of the year, which means that freight rates will soon return to normalization in the future.
freight rate may drop to pre-epidemic level by the end of the year
HSBC Bank (HSBC) latest research report stated that due to the faster-than-expected freight rate drop than expected and the ease of port congestion, the spot freight rate for container transportation may drop to the freight level of 2019 as early as the end of this year .
Last Wednesday, the global bank lowered its demand forecast for 2023 and raised its capacity supply forecast for 2022-2024 to reflect that the easing of port congestion is releasing tethered capacity to the market.
"So we now expect the Shanghai Container Freight Index (SCFI) to bottom out in mid-2023, and the profitability of the shipping industry will bottom out in the second half of 2023 ." Parash Jain, head of research at HSBC Shipping, Ports and Asia, wrote in a Global Container Shipping Report. Previously, it predicted that sea freight rates would bottom out in 2024.
As freight rate levels drop so sharply, HSBC Bank report pointed out that in the next two years, the shipping company's profit level has a "significant downside risk" . The bank expects shipping companies to remain flexible in the third quarter of this year, but starting in the fourth quarter, profits will decline and continue until 2023.
Shipping Company: I didn’t expect to earn more this year
“Spring goes and autumn comes again, freight prices rise and fall will never end, whether it is high or low, supply and demand increase or decrease price decrease, wait for inflation to slow down, stop the decline and reverse the decline." Evergreen Shipping General Manager Xie Huiquan uses a poem to describe his views on the shipping market.
Xie Huiquan recently said that the market originally thought that 2021 was the peak of the transportation industry, but did not expect to make better profits this year . The overall market revenue performance in the first half of this year was very impressive, and it can be said to be the best performance in history.
Faced with the decline in freight rates and the decrease in demand, Xie Huiquan believes that the container shipping market is returning to normal after three years of madness, but the future outlook is not pessimistic.
However, affected by the rise in the US dollar, the inflation of remained high and the war in Russia and Ukraine, performed mediocrely in the third quarter, and its revenue also declined compared with the previous two quarters. Revenue in the fourth quarter is expected to continue to decline . Although the performance in the third and fourth quarters was not as expected, there were still good results throughout the year, and it would even be better than last year.
Looking forward to next year, Xie Hui full statement that the good or bad integrated transportation market still depends on the supply and demand situation, and the demand side depends on the US dollar, inflation and the evolution of the Russian-Ukrainian war , but global economy is currently expected to maintain positive growth. International Monetary Fund (IMF) predicts that the growth rate of GDP next year will be 2.7%;
As for the supply side, it is estimated that new ship delivery will increase by 8.2%. The easing of the Port of Serbia can release 5-7% of the cabin, but the new carbon emission regulations will take effect next year may absorb 10% of the capacity.
, and 8.2% of the new ship delivery is not in place in one step, so the actual supply increase is not that serious. , so has a relatively conservative view of the market in 2023, but is not pessimistic.
analysts said that the current freight rate level in Europe and the United States is still above the cost price, and the main integrated transportation companies of can still make profits, but many high-priced integrated transportation companies or small ships may face a turning point in losses, especially the Western United States.
On the other hand, the three major shipping alliances of also have sufficient ability to regulate transportation capacity . The top ten global transportation companies have 85% of the market capacity and can further control the supply of transportation capacity by drawing ships and reducing shifts.
In order to cope with the sharp drop in freight demand from Far East to North America and the decline in freight rates, the top two major transportation giants Mediterranean Shipping and Maersk Shipping have announced the closure of certain route services.
