The plummeting trend in spot container rates shows no sign of stopping, as evidenced by the considerable double-digit drops on certain trade routes. The biggest decline is being seen on the eastbound trans-Pacific routes, which have been experiencing an unparalleled fall since the end of July.
The Ningbo Shipping Exchange's NCFI, which tracks export container freight, dropped by 7.8% last week to close at 1,762.8 points. Out of the 21 routes monitored, 20 saw declines. Meanwhile, the Drury WCI composite index, measuring global shipping rates, continued its downward trend for the 29th week running, declining by 8% to 4,942 per FEU. Similarly, the FBX composite freight rate index fell 4% to 4,653 per FEU compared to the previous week. These indices suggest ongoing struggles for the shipping industry amid broader global uncertainties.
According to the Ningbo Shipping Exchange, demand for transportation on North American routes has not improved and spot market booking prices continue to decrease. Specifically, the freight rate for the American and Western routes has dropped below 3000 per FEU. Additionally, the U.S. East line freight index decreased by 8.0% from the previous week, while rates on the West routes are down by 9.8 percent compared to the previous week and an overall 64 percent since the beginning of the year.
In the latest update on the Drury World Container Index, it has been reported that spot freight rates from Shanghai to Los Angeles have experienced an 11% decline from the previous week. The rate now stands at 4,252 per FEU, with a decrease of 530. Similarly, the rates for freight from Shanghai to New York have also fallen, by 5% from the previous week and a staggering 47% from a year earlier. The new rate now stands at 8,477 per FEU. These fluctuations in the container shipping rates have a significant impact on global trade, and it remains to be seen how the market will continue to fare in the coming weeks.
According to the FBX freight index, fares between Asia and the West experienced a substantial decline of 9% from the previous week, settling at 3,942 per FEU. Similarly, rates on U.S.-East routes saw a 2% decrease, amounting to 8,546 per FEU. Chief economist at FBX in New York, Judah Levine, highlighted that despite the fall in fares, freight volumes and congestion transitioning to Eastern U.S. ports were bolstering rates, thereby averting any significant decline.
As per the analysis conducted by Flexport Market, the global demand and freight rates for eastbound trans-Pacific routes have been decreasing consistently, leading to empty flights. This is a clear indication that the freight market is facing difficult times, and the shippers' expected demand and cargo volume for this route are uncertain leading up to this year's National Day Golden Week. In an effort to avoid congested ports, carriers are looking to reduce the total number of ships in port, particularly in the Eastern and Gulf Coast ports. Therefore, it is expected that the market will continue to experience empty traffic throughout September and October".
In the European shipping market, there is currently an oversupply of capacity, resulting in a gradual decline in line rates. The NCFI index for European routes experienced a 6.3% drop from last week, while the East line freight index fell 1.6% over the same period. Rates on the western route decreased by 6.2% compared to the previous week. The Drury WCI Index also reported a significant decline in spot freight rates between Shanghai and Rotterdam, with a 10% drop totaling 764 to 6,671/FEU. Meanwhile, Shanghai - Genoa experienced a 7% fall to 7,353 per FEU.
The third quarter saw a lack of peak season with a slowdown in demand, and unfortunately, there are no signs of recovery. As we approach the National Day golden Week, there is little expectation for a surge in freight activity. Currently, there is ample space available, but the reliability of shipping schedules is still being impacted by numerous empty flights, delayed voyages, and port hopping. The situation has worsened in Europe, particularly in Hamburg and Rotterdam, where port congestion has reached critical levels. This, in turn, has caused further delays and hindered the efficient return of ships to Asia.
Based on the Ningbo Shipping Exchange report, it was observed that there was a substantial increase in the demand gap for Middle East line cargo last week. Consequently, the spot market booking price experienced a further decline, reaching a significant drop of 15.3% compared to the preceding week. Additionally, freight rates on routes to the West of South America fell by 25.7% from the previous week due to both a scarcity of freight demand and intensified price competition between market players.
