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[Hongde Information] The last week of freight rates finally stopped falling? The global shipping industry is hard to hide the decline, 2023 fear of price war!
Jan 05,2023
After a 28-week downward spiral, the Shanghai Container Freight Index (SCFI), which measures the spot freight rates of container shipments from Shanghai to multiple global destinations, has ushered in new progress. According to the latest data released by the Shanghai Aviation Exchange on December 30, the Shanghai Export Container Freight Index (SCFI) rose slightly last week 0.46 reached 1107.55, ending the continuous decline since June 10. It is down 78.1 percent from a year ago, and 1107.55 points is close to the lowest level since August 2020.
Last week,Far East to Europe LineFreight rates per TEU rose $29, or 2.76 percent, to $1078.Far East to Mediterranean LineFreight rates per TEU fell $46, or 2.43 percent, to $1850.Far East to West America LineFreight rates per FEU rose $5, or 0.35 percent, to $1423.Far East to US East LineFreight rates per FEU fell $29, or 0.94 percent, to $3067.
South American Line (Santos) $1433 per TEU, down $137 or 8.73 per week.Southeast Asia Line(Singapore) The freight rate per TEU was 188 US dollars, down 1 US dollar or 0.53 per cent.Kansai, Kanto Line, JapanFreight rates per TEU were flat the week before.Korea LineFreight rates per TEU rose $13 to $238.
It is understood that the SCFI index in 2018-2019 roughly fluctuated at 800-1100 points, from 2020 onwards affected by the epidemic, lack of work, plug port caused global supply chain chaos, the SCFI index all the way up, in the first quarter of 2022 had reached an all-time high of 5109 points. However, freight rates have fallen for six months since the second half of 2022, indicating the end of the era of epidemic dividends.
Compared with the all-time high in early 2022, the SCFI index has fallen by more than 78% this year, and the US Western and European lines have fallen by more than 82% and 86%.
Industry insiders pointed out that although freight rates have begun to show signs of stabilization, it is not ruled out that they are falling back. Many shipping companies plan for the holidays and the off-season after the year, has begun to grab the goods and dump the box, do not rule out the late January 2023 freight rate again waves, then need to observe whether the shipping company is to enhance the control of cabin strength to stabilize freight rates, or bargain to grab goods.
As the market uncertainty is still high and the market is uncertain in the first half of 2023, a number of shipping companies estimate that the first quarter may be relatively light. With the easing of inventory consumption, inflation and energy prices in the United States, coupled with the expected adjustment of economic policies in major countries, the demand in the second quarter may slowly improve, and the price and volume in the third quarter are expected to rise.
Secondly, the global supply and demand capacity in 2023 will be affected by IMO's new 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 estimated that 10% of the shipping space may be absorbed after the two new carbon emission regulations come into effect at the beginning of the year. Therefore, the increase in actual supply may not be as serious as expected.
Under the significant reduction in the number of shipping companies, the European and American routes, although the adjustment of the comprehensive rate increase surcharge (GRI) before the Lunar New Year,However, due to the explosion of the European routes, the in stock market paid-in freight rates rose, the United States West Line rose slightly;but the mediterranean and us-east freight rates above the cost line fell slightly,The Shanghai Shipping Exchange's latest Container Freight Index (SCFI) edged up 0.04 per cent to 1107.55.
Freight forwarders pointed out that the in stock market freight rate of the US-West route is currently stable at a low level. The freight rate of 1200-1350 per large box (40-foot container) has been stable, and some urgent goods can receive a freight rate of US $1500. The US-East route is flat, with about 2700-2900 US dollars per large box.
Mediterranean Shipping, Hapg-Lloyd, HMM, Japan Ocean Network Shipping (ONE) and other shipping companies have all notified the European route that the existing freight rate will be postponed. The US line GRI will be postponed on January 15, and other shipping companies will also give oral notice. Therefore, the current freight rate level will be maintained until January 14, less than a week after the 14th of the Lunar New Year, and will enter the big off season after the year. The industry estimates that January 15 will not make an ultra-term.
The global shipping industry is no longer glorious, and 2023 is afraid of a price war.
After the global shipping industry has experienced supply chain troubles, capacity constraints and soaring container freight rates over the past two years, the situation in 2023 will be very different, at least from the perspective of the global shipping giants,The situation is not optimistic, may fight a price war.
According to the Wall Street Journal, spot container freight rates began to decline at the beginning of last year and accelerated in the second half of the year. Drewry's Global Container Index (WCI), a London shipping consultancy, plunged 77% by the end of December and is likely to fall further, indicating the end of an era of record profits for carriers.
Shipping companies are more likely to fight a price war this year:on the demand side,There is a negative risk of recession caused by U.S. inflation and interest rates and 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 ship capacity this year will reach about 2.5 million TEU, the largest ever. Shipping companies will have to cope with both reduced global trade and a surge in ship supply, unless carriers form alliances to reduce voyages, cut excess capacity and persuade customers to sign long 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 ends.Before that, the carrier must work hard to negotiate with the customer to maintain the long-term freight rate. Negotiations will not be easy, however, as contract freight rates will decline with in stock freight rates. Christian Roeloffs, chief executive of container leasing and trading platform Container xChange, believes that freight forwarders 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 storms this year. Although they can still use the conflict between Russia and Ukraine and geopolitical uncertainty to obtain bargaining chips with customers, the current prosperity is undoubtedly over.
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