Data from major freight indexes released last week show that freight rates in the spot market continue to decline, but port congestion caused by strikes and other factors are slowing down the rate of decline.
01 European and American routes canceled 76 flights
According to Drewry statistics, during the 29th-33rd weeks from July 18 to August 22, a total of 76 voyages on European and American routes were canceled, accounting for about 10% of the total voyages.
The shipping company’s cancellation of voyages is considered to be to avoid a decline in freight rates by regulating shipping capacity, but the shipping company explained that it was due to the delay in shipping schedules caused by port congestion and the reduction of sailings and the combination of sailings.
Previously, platforms released reports stating that shipping companies are adopting more aggressive empty shipping strategies to cope with the decline in demand. “With ocean freight spot prices plummeting and container demand declining year-on-year, carriers have taken action to protect profitability,” it said.
Shipping lines will employ “other strategies,” including slower sailings, to shore up freight rates and mitigate the impact of soaring fuel costs, the report said.
Specifically, according to the latest data released by Drewry in this issue, the world’s three major shipping alliances have canceled a total of 61 voyages in the next five weeks (weeks 29-33).
Among them, THE alliance has canceled the most voyages, with 23.5 voyages; 2M alliance has canceled 20 voyages, and the Ocean Alliance, which has the least cancellations, has canceled 17.5 voyages;
Of a total of 758 scheduled sailings on major routes such as trans-Pacific, trans-Atlantic, Asia-North Europe and Asia-Mediterranean, 76 sailings were canceled between weeks 29 and 39, a cancellation rate of 10%.
According to Drewry data for this period, 71% of empty flights during this period will occur on the eastbound trans-Pacific trade route, mainly to the West Coast of the United States.
02 Port congestion slows down freight rate decline
The Drewry World Container Freight Index (WCI) has declined for 21 consecutive weeks. Last week, the WCI Composite Index decreased by 0.7% on a weekly basis to $6,998.8/FEU, an annual decrease of 21%;
The Baltic Freight Index (FBX) global composite index was 6,414 US dollars/FEU, a weekly decrease of 1%; the Shanghai Shipping Exchange’s SCFI was a weekly decrease of 1.67%.
However, last Thursday, strikes launched by German port unions and legal congestion at other major ports in Northern Europe are slowing down the decline in freight rates. WCI’s Shanghai to Rotterdam freight rate was US$9,182/FEU, a weekly decrease of 1%; the FBX index Asia to Northern Europe freight rates The price is US$10,393/FEU, a weekly decrease of 0.7%, which is a slight decrease.
A 48-hour strike by 12,000 dockworkers at the German ports of Hamburg, Bremerhaven and Wilhelmshaven paralyzed the ports, exacerbating the already long-standing congestion at ports in northwest Europe. Before the strike, the Port of Hamburg had to wait up to two weeks to dock. The phenomenon of mooring.
The latest data from WCI shows that the spot freight rate from Shanghai to Los Angeles is US$7,480/FEU, down 1% on the week and 23% annually; the spot freight rate from Shanghai to New York is US$10,164/FEU, basically the same as the freight rate in the previous period.
FBX data shows that the spot freight rate from Asia to the West US is 7,234 US dollars/FEU, down 2% on the week, and the spot freight rate from Asia to the East US is 8,233 US dollars/FEU, up 1% on the week, mainly due to the increasing congestion at the East US port. Currently in New York -The waiting time for ships at the Port of New Jersey is more than 20 days, and the waiting time at the Port of Savannah is 10 to 20 days.
One reason for continued congestion at ports is that high inventories have exhausted off-dock storage space.
Judah Levine, director of research at Freightos, said: “With shelves and warehouses full, the current drop in buying demand will exacerbate congestion, as imported goods that cannot be sold will be stranded in port yards or rail hubs for long periods of time. This will take some time to ease. For The decline is likely to be slow in terms of congestion and freight rates.”
Backlogs continue to plague North America and Europe. Clearly, current market conditions will take time to return to normal. As shipping companies tighten blank sailings, adjust effective supply and reduce fluctuations in spot freight rates. Spot freight rates are not expected to plummet and collapse.
Over the next year, however, shipping lines will have to deal with the unusual market conditions currently in which weak spot rates are lower than contract rates.
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