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Sudden! Dropped 40%! European line diving......

Aug 13,2024

Recently, the container freight rates, which have reached new highs in the first half of the year, have been significantly loosened.On the one hand, a number of shipping giants began to lower their quotations, with the 40-foot container rate on Asia-Europe routes down from about $9000 in July to below the current $8000.

Agglomeration Index (European Line) Dive

On August 8, the main futures contract of the container transport index (European line) dived, and the intraday decline once expanded to 15%.Shanghai International Energy Trading Center listed on the collection and transportation index.(European line) futures multiple contracts fell collectively. By the close, the main contract EC2412 was down 15.03 per cent at 2754.9. EC2408 and EC2410 fell 0.40 per cent and 7.77 per cent, respectively. EC2502, EC2504, EC2506 all fell by about 10%. From the situation after the close of the 8th, EC2412 than EC2410 appeared nearly 20% of the depth of the water, which is more than the previous shipping market off-peak characteristics of the obvious differences. From a long-term perspective, the main futures contract of the Container Transport Index (European Line) soared to 4763.6 points on July 4 this year, the highest point since its listing, and then continued to fall sharply, with a cumulative decline of 40%. In the period from March to July this year, the main futures contract of the container transport index (European line) once soared more than 260.

in stock freight rates enter adjustment

Among them, the impact of weaker in stock freight rates is particularly evident. With the goodsSeasonal weakening of volume and increased supply pressure on ships working overtime,in stock freight rates continue to pull back. The average price of wk32/33 is US $8280 for large cabinet and US $8180 for large cabinet respectively, down US $150 and US $100 from the previous month. Haitong Futures pointed out that the Maersk wk33 opening price of the second cut also had an impact on market sentiment. RecentlyThe pace of price adjustment has accelerated,The ship division reduced the price by 200-300 US dollars per round. It is expected that the price center will move down further in late August, and the frequency and magnitude of the downward adjustment will need to be observed. However, there is also news that, based on market mechanism considerations, the world's major shipping companies may plan to increase the freight rates on the US-West and US-East routes by 9%-15% from August 15. In addition, the delivery of new ships from the total amount and structure to make up for the capacity gap under the bypass, cargo volume year-on-year no increase in the expected next year under the overall freight rate pivot or will move down.

Port congestion eases and capacity increases

From the port congestion data, the tension of European routes has also eased. According to HPL's latest port data, most European ports maintain normal operation. At present, the utilization rate of storage yard in Antwerp port in Belgium is about 70%, that in Rotterdam port in the Netherlands is 70%-75%, that in Hamburg, Germany is about 75%-80%, and that in Le Havre, France is about 60%-65%.From the container ship in port capacity data,Affected by the periodic typhoon weather, China's port capacity in port capacity rose 8.3 percent month-on-month, northwest European port capacity in port capacity rose 2.7 percent month-on-month, Southeast Asian port congestion continued to ease, in port capacity fell 1.0 percent month-on-month.

Geographical situation changes

For the next phase of freight rate trends, it is recommended to focus on three major marginal changes.

Container ship detours: Special attention is paid to whether traffic in the Suez Canal, the Bab el and the Gulf of Aden remains low, and whether traffic in the Cape of Good Hope remains high, which directly affects route efficiency and costs.
Geopolitical situation in the Middle East: Geopolitical uncertainty may affect navigation in the Red Sea, which in turn may affect global shipping layout and freight rates. If the situation eases, shipping companies need time to adjust their routes, which will indirectly affect market supply and demand.
Transport capacity supply pressure: In the short term (until the second week of September), capacity supply pressure is expected to be small, as some of the new capacity is offset by detours and port congestion. However, attention needs to be paid to the actual situation of subsequent capacity delivery and its impact on freight rates.

Overall. Institutional analysis believes that the recent overall sentiment in the shipping market is weak, macro recession trading is expected to enlarge. The follow-up needs to pay attention to the current situation of container ship detours, the geographical situation in the Middle East and the marginal changes in capacity delivery. Judging from the shipping company's quotation, the freight rate center is expected to decline further from late August to early September.

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