Freight rates from Asia to the US West Coast fell sharply by 15% in a single week
According to the latest data from Freightos Baltic Exchange (FBX), last week, the freight rate from Asia to the West Coast of the United States fell sharply by 15% in a single week to $1,209 per 40 feet.
Analysts point out that at current freight rates, this average price can barely break even for even the most cost-effective container liner companies on the route.
For the U.S. Eastern and Gulf Coast, FBX readings fell 7% to $2,322 per 40 feet.
Although the previous labor negotiations between the United States and Spain achieved a major breakthrough, with the Pacific Maritime Association (PMA), the employer representative, and the International Warehouse and Longshore Workers Union (ILWU), the labor representative, reaching a preliminary six-year agreement, the resumption of shipping routes has not yet been achieved. smoothly.
According to industry insiders, first of all, the trend of “Western cargo moving eastward” will not change in the short term, and it is difficult for the US-Western freight rate to be supported in this regard.
On the one hand, only a preliminary agreement has been reached, and the agreement will need to be formally signed through union discussion and approval, so the risk is still there; on the other hand, some goods have already been booked or long-term contracts have been signed, and cannot be easily changed. Therefore, it is difficult for the US-Western freight rate to be supported in this regard in a short period of time.
In addition, port turnover efficiency increases, and freight rates may fall as a result. The current market demand is sluggish. If the port turnover efficiency increases due to the increase in the number of workers, freight rates may fall due to oversupply, and may even lead to a “slow peak season” situation.
John McCown’s analysis of container throughput at major U.S. container ports reported that imports fell 21% in May compared with the previous year; he noted that this was the eighth consecutive month of double-digit year-over-year declines in U.S. imports .
Analysts at Linerlytica pointed out that following the earlier departure of small liner companies such as Transfar, TS Lines, SeaLead, BAL and Jinjiang Shipping, CU Lines and Pasha have become the latest shipping companies to withdraw from the market. For shipping companies that operate small container ships, it is impossible to make a profit at a freight rate of US$1,500 for a large container.
Shipping analysts are pessimistic about the outlook for liner shipping amid disappointing progress on destocking in the United States and Europe.
Indeed, MSI’s June Horizon Container Ship Report predicted that the shipping industry would face a “challenging” second half of the year unless demand “recovers sufficiently to offset the coming large-scale capacity injections.”
“In addition, the global macroeconomic environment remains far from favorable, with significant tightening of monetary policy continuing, which we expect will lead to recessions in Europe and the United States,” the agency warned.
The agency added that it expects freight rates to rise “only slightly” by the end of the third quarter, with “risks tilted to the downside.”
At the same time, container spot freight rates on major container routes continued to fall.
The world’s three major container freight indexes collectively fell
The latest data from the Shanghai Shipping Exchange shows that on June 21, the Shanghai Export Container Comprehensive Freight Index released by the Shanghai Shipping Exchange was 924.29 points, down 1.1% from the previous issue.
North American routes:
The market freight rate (shipping and shipping surcharges) of the basic port in the West Coast of the United States was US$1,173/FEU, down 2.8%.
The freight rate (shipping and shipping surcharges) in the East US basic port market was US$2,061/FEU, down 2%.
European routes:
The basic port freight rate in Europe is US$793/TEU, down 1.9% from the previous issue.
The freight rate on the Mediterranean route was US$1,588/TEU, down 0.8% from the previous issue.
Persian Gulf route: freight rate is US$1,226/TEU, down 1.0% from the previous issue
Australia-New Zealand route: freight rate is US$272/TEU, up 1.1% from the previous issue
South America route: freight rate is US$2,419/TEU, up 1.9% from the previous issue
Data from Drewry also shows that freight rates in the current container shipping market are falling.
Last week, the World Containerized Freight Index (WCI) fell another 4% to $1,536/FEU, a 79% decrease compared to the same period last year and 43% lower than the 10-year average freight rate ($2,688/FEU).
Looking specifically at the major export routes from Shanghai, freight rates are still on a downward trend, but Drewry predicts that spot prices on major routes may rise in the coming weeks.
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