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Price increase notice! The shipping company announced that starting from December 15, the freight rate of this route will be increased.
Dec 09,2022
As shipping rates continue to fall, the industry is generally worried that the market is facing a "hard landing", liner companies are also actively taking various measures to slow down the decline in freight rates. The decline in freight rates has converged as shipping companies have stepped up efforts to control capacity. Recently, some shipping companies began to raise freight rates on Southeast Asian routes.
According to the "Maritime Silk Road Index" recently released by the Ningbo Shipping Exchange, the freight index of the Thailand-Vietnam route from November 26 to December 2 was 335.4 points, down 24.3 per cent from last week.
The report pointed out that the demand for transportation on the Thai-Vietnamese route is weak, and liner companies have used price cuts as the main means to strengthen cargo collection, and the spot market booking prices have fallen sharply.
OOCL OOCL, however, went the other way. Recently, the shipping company issued a notice that starting from December 15, the freight rate for goods exported to Southeast Asia will be increased on the original basis, with 20-foot ordinary boxes at US $100 per box and 40-foot ordinary boxes at US $200 per box. The original text of the notice reads as follows:
However, since the liner company issued the above notice, no other companies have been counted to follow up the upward adjustment strategy.
It is understood that the changes in Southeast Asian routes are quite large. Judging from the quotations in the spot market, during the one-month period from the end of October last year to the beginning of December last year, the freight rate for the 40-foot container on the South China to Ho Chi Minh Port route rose from the original US $500 to US $2000-2500.
However, during the peak shipping season in September this year, the Thai-Vietnamese route was sluggish, and there was even a situation of "zero freight rate" and "negative freight rate.
The "Maritime Silk Road Index" released by the Ningbo Shipping Exchange shows that since 2020, the freight rates of Southeast Asian routes including Thailand-Vietnam routes and routes to the Philippines and Singapore have been rising all the way, but since the second half of this year, Southeast Asian routes have continued to decline, rising slightly in October.
Not only Southeast Asian routes, the shipping market as a whole is in a state of continuous decline. According to the World Container Freight Index (WCI) released by Deluli last week, spot freight rates on Asia-Europe routes fell 10% to $1965/FEU in a week, a figure that has fallen 50% in the past four weeks.
The industry expects that if freight rates on Asia-Europe routes continue to decline, spot freight rates will fall below $1500/FEU around Christmas.
Falling freight rates have caught liner companies off guard. According to China Shipping Weekly, liner companies are facing huge pressure on operating costs on Asia-Europe routes because they do not make profits from operations.
Shipping consultancy Alphaliner warned that some shipping companies' performance could fall by 70% in the fourth quarter. Maersk also stated in the Asia-Pacific Market Information Report recently that the current market spot freight rate plunge is "dramatic" and the company is adjusting its network to adapt to the new market situation.
According to the latest data released by Dreary, out of a total of 730 scheduled flights on the main trade routes of trans-Pacific, trans-Atlantic and Asia-Northern Europe and the Mediterranean, 96 flights were canceled between the 49th week (December 5-11) and the 1st week (January 2-8), accounting for a cancellation rate of 13%.
During this period, 54% of the blank voyages will take place in the trans-Pacific eastbound, 29% in Asia-Northern Europe and the Mediterranean, and 17% in the trans-Atlantic westbound trade.
In the next five weeks, the three major leagues canceled a total of 74 voyages, of which THE League canceled a maximum of 46.5, the Ocean League and 2M League canceled 21.5 and 6 respectively.
The shipping industry continues to realignment to pre-epidemic levels, a trend exacerbated by weak demand and easing port congestion, Druri said.
The market is likely to remain a major challenge next year with excess capacity and declining sales volumes. From the fourth quarter to the next two years, a large number of new container ships will be delivered centrally. It is reported that in January 2023, the effective capacity of major East-West trade will increase by 12% year-on-year.
The challenge of oversupply intensifies, the shipping company is bound to continue to expand the reduction of parallel flights, pumping routes, not only to stabilize the spot price, but also related to the European and American line long contract signing.
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