After falling for 27 consecutive weeks, container freight rates finally stopped falling in the last week of 2022.
Freight rates rise for first time in seven months
According to the latest data released by the Shanghai Shipping Exchange on December 30, the Shanghai Export Container Freight Index (SCFI) rose 0.46 points to 1107.55 points, a weekly increase of 0.04%, ending the continuous decline since June 10.
Among them, the freight rates of the main routes from the Far East to Europe and the Far East to the United States and the West have increased. The SCFI index’s monthly decline in December converged to 9.95%.
The freight rate per TEU on the Far East to Europe line increased by US$29 to US$1,078, an increase of 2.76%.
The freight rate per TEU on the Far East to Mediterranean line fell by US$46 to US$1,850, a decrease of 2.43%.
The freight rate per FEU from the Far East to the US West line increased by 5 US dollars to 1,423 US dollars, an increase of 0.35%.
The freight rate per FEU from the Far East to the US East route fell by US$29 to US$3,067, a decrease of 0.94%.
The freight rate per TEU of the South American line (Santos) was US$1,433, a week-on-week decrease of 137 yuan, or 8.73%.
The Southeast Asia line (Singapore) freight rate per TEU was US$188, down US$1 or 0.53% on the week.
It is understood that the SCFI index fluctuated between 800 and 1100 points between 2018 and 2019. Affected by the epidemic since 2020, labor shortages and port congestion caused chaos in the global supply chain, the SCFI index has been rising, reaching a record high in the first quarter of 2022. Points of 5109 points. However, freight rates have fallen for six months since the second half of 2022, indicating that the era of epidemic dividends is over.
Compared with the historical high in early 2022, the SCFI index has fallen by more than 78% this year, and the US Western Line and European Line have fallen by more than 82% and 86%.
Due to the drastic reduction and consolidation of shipping companies, although the European and American routes failed to adjust the comprehensive rate increase surcharge (GRI) before the Lunar New Year, due to the phenomenon of cabin explosion on the European routes, the actual freight rates in the spot market increased, and the US-Western route slightly increased. rise.
Freight forwarding practitioners pointed out that the current spot market freight rate on the US-West route is stable at a low level, with the freight rate per large box (40-foot container) at 1,200-1,350 US dollars. Some urgent goods can receive a freight rate of 1,500 US dollars; the US East route remains unchanged. , about US$2700-2900 per large box.
Shipping companies such as Mediterranean Shipping Company, Hapag-Lloyd, HMM, Japan Ocean Network Shipping (ONE) and other shipping companies have notified that the existing freight rates on European routes have been postponed. The GRI on the US line has been extended to January 15. Other shipping companies have also notified verbally. Therefore, The current freight rate level will be maintained until January 14th. After the 14th, it will be less than a week before the Lunar New Year, and the off-season will enter after the new year. The industry generally estimates that there will be no ultra-short-term increase on January 15th.
The glory of the global shipping industry is no longer there, and a price war may begin in 2023
After the global shipping industry has experienced supply chain troubles, limited shipping capacity and soaring container freight prices in the past two years, the situation it will encounter in 2023 will be completely different. At least from the perspective of global shipping giants, the situation is not optimistic and may be serious. Fight a price war.
According to the Wall Street Journal, container spot freight rates began to decline at the beginning of last year and accelerated in the second half of the year. The World Container Index (WCI) of Drewry, a London-based shipping consultancy, plunged 77% by the end of December last year and may fall further, indicating the end of the era of record profits for shipping companies.
The possibility of a price war among shipping companies this year has increased: on the demand side, there are negative effects from rising inflation and interest rates in the United States and the risk of economic recession caused by the European energy crisis; on the supply side, the shipping industry is preparing to receive new ships on a large scale .
Drewry estimates that unless the delivery of ships is delayed, the world’s new shipping capacity will reach approximately 2.5 million TEU this year, the largest in history.
Shipping companies will have to deal with two major problems at the same time: reduced global trade and a surge in ship supply, unless shipping companies form alliances to reduce voyages, cut excess capacity, and persuade customers to sign long-term contracts.
Barclays analysts believe that freight rates will not stabilize until the global economy improves, the current destocking cycle ends, and consumer behavior returns to normal after the epidemic. Previously, airlines must work hard to negotiate with customers to maintain long-term freight rates. .
Negotiations will not be easy, however, as contract freight rates will fall along with spot freight rates. Christian Roeloffs, CEO of container leasing and trading platform Container xChange, believes that freight forwarders and cargo owners will remain on the sidelines this year, especially at the beginning of this year.
The Wall Street Journal pointed out that shipping companies may face more turbulent waves this year. Although they can still use the Russia-Ukraine conflict and geopolitical uncertainty to gain leverage in negotiations with customers, the current boom is undoubtedly over.
Looking forward, as market uncertainty remains high and the market is unclear in the first half of 2023, many container shipping companies predict that the first quarter may be lighter. As inventory consumption in the United States, inflation and energy prices ease, coupled with the expected decline in major countries With economic policy adjustments, demand may gradually improve in the second quarter, and we expect prices and volumes to rebound in the third quarter.
Secondly, global supply and demand shipping capacity in 2023 will be affected by the new IMO environmental protection regulations. The global economy is currently expected to maintain positive growth. Although the supply of new ships will increase by 8.2%, it is expected that after the two major new carbon emission regulations take effect at the beginning of the year, it may absorb The actual increase in supply may not be as severe as expected.
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