Ocean freight rates may continue to decline

Drewry expects rates to continue falling in the coming weeks. Some industry investment consultants said that the super cycle of shipping has ended, and the freight rate will decline rapidly in the second half of the year.
 

With the widespread vaccination of vaccines, the knock-on effect of the original restrictions on port loading and unloading has been significantly eased since the first quarter. Truck and multimodal operations have gradually resumed, container flow has accelerated, dockers have been quarantined and relieved, and ship speed has increased.
 

On June 30, Drewry, a British aviation consulting agency, released the latest World Containerized Freight Index (WCI), which continued to fall by 3% this week to $7,066.03/FEU.

It is worth noting that, for the first time, the spot freight rate of the index, which is based on the 8 major routes of Asia-America, Asia-Europe, and Europe and the United States, has experienced a comprehensive decline for the first time.
 

Shanghai-Los Angeles spot freight fell 4% or $300 to $7,652/FEU. That's down 16% from the same period in 2021.
 

Shanghai-New York spot rates fell 2% to $10,154/FEU. That's down 13% from the same period in 2021.
 

Shanghai-Rotterdam spot freight fell 4% or $358 to $9,240/FEU. That's down 24% from the same period in 2021.
 

Spot freight rates from Shanghai to Genoa fell 2% to $10,884/FEU. That's down 8% from the same period in 2021.
 

Los Angeles-Shanghai, Rotterdam-Shanghai, New York-Rotterdam and Rotterdam-New York spot rates all saw 1%-2% declines.
 

From the perspective of the overall supply and demand relationship, the supply bottleneck has been opened, and the loss of transportation efficiency is no longer. In 2021, a 5% increase in vessel loading capacity will result in a 26% loss in efficiency due to port congestion, dragging down real supply growth by only 4%.
 

The third quarter is the traditional peak season for shipping. According to industry insiders, according to the usual practice, European and American retailers and manufacturing companies began to pull goods in July. Price movements are full of variables.
 

However, in 2022 and 2023, it is worth noting that once demand declines in the third quarter, transportation efficiency is expected to be further improved. It is expected that with the gradual recovery of the 26% efficiency loss caused by the port plugging, the actual supply growth in the same period will be Significant acceleration to 25%, 13%.
 

At present, factors such as the Russian-Ukrainian conflict in the market, global strikes, interest rate hikes by the Federal Reserve, and inflation may curb demand in Europe and the United States. In addition, the high costs of raw materials, transportation and logistics, and foreign trade manufacturers tend to be conservative in preparing materials and production, which may affect the driving force for pulling goods; at the same time, The number of ships in the Port of Messina decreased, the supply of transportation capacity increased, and the ocean freight rate continued to adjust at a high level.