During the rapid soared of the shipping cost in 2021, no one expected that the shipping would usher in such a big change at the end of 2022. Nowadays, with the freight prices falling for several months. There are some of the quotation has been below cost price on the market. Meanwhile, the downward trend of freight rates still doesn’t have any reversing.
According to the weekly report on China’s export container shipping market released by the Shanghai Shipping Exchange on November 4, the Shanghai Export Container Freight Index SCFI has fallen to 1579.21 points, down 7% from the previous period. European and American routes are the most important routes in the global shipping market, they are also the routes that have seen a significant decline in this year. Especially the US-West route. As one of the busiest routes in the world, the freight rate in the past two years can be described as a roller coaster ride.
The latest Ningbo Export Containerized Freight Index (NCFI) of Ningbo Shipping Exchange closed at 1193.5 points, down 9.6% from last week. And the freight rates of 21 routes all fell.Besides, from the perspective of the overall level in October, the average value of the index is only at 1391 points, a month-on-month decrease of 20.8%, and a year-on-year decrease of 65.7%.
Compared to last year, the sea freight has risen the most fiercely, some of the container offer has been even up to 30,000 US dollars, many foreign buyers even had to give up their orders because they didn’t get the shipping space or the freight price was too higher than the commodity prices.
The report by Chief Information Officer Xu Kai from Shanghai International Shipping Institute (SISI). he mentioned that according to the data from ports and shipping. It is show that there is about 30% of global container ships were at berth in the third season of last year. And the proportion dropped to about 26% in the same period of this year. Which means that the global shipping turnover capacity has increased. On the other hand, the demand for shipping capacity in global commodity trade has declined. That’s why the lower freight rates are inevitable.
In addition, the launch of a large number of new ships by shipping giants has exacerbated the gap between supply and demand. The abnormally high freight rates last year allowed many shipping companies to make a lot of money. Some large shipping companies invested their profits in new ships. Before the epidemic, the global shipping capacity was already higher than the demand.
According to Energy and the Braemar of Ship consulting company. They pointed out that there will be a series of new ships will be launched in next two years, and the net growth rate of the fleet is expected to exceed 9% in2023 and 2024. While the year-on-year growth rate of container freight demand will be turn negative in 2023, which will further exacerbate the imbalance between global capacity and volume.
Based on the overall situation of the industry. Kang Shuchun the president of the China Federation of Logistics & Purchasing has been pointed out that the US line freight between 4,000-5,000 US dollars is more suitable. And if it is less than 3,000 US dollars, the situation of shipping companies will reverse. He also mentioned that it would be difficult even for freight prices to return in the next 5 years.
In addition, in order to slow down the spot freight rates of the decline of container. Shipping companies will continued to cancel voyages from China to North Europe and to the West of the United States. According to Drury data, there are total 734 scheduled flights. But around 100 were canceled between week 45 (November 7-13) and week 49 (December 5-11) to Trans-Pacific, Trans-Atlantic and Asia-Nordic and Mediterranean, the cancellation rate is up to 14%.
