Container freight rates are slowly rising, but ongoing challenges are hampering a full recovery Ship’s crew

From Charlie Bartlett (The Loadstar) –

According to Drewry’s latest assessment, global container freight rates are still – marginally – above pre-pandemic levels (although costs have risen).

Drewry’s World Container Index (WCI) composite index is pointing to a modest 0.9% gain over the past week, to hit $1,488 per 40-foot container (feu). However, the prices have been drastically lower from year to year; is down 78.7% compared to the same week in 2022 and is now 86% below its September 2021 peak of $10,377/feu.

However, a comparison to pre-pandemic levels is more favourable: rates remain 5% above 2019 averages, despite a spate of new construction creating overcapacity.

Analyzing specific routes, freight rates from Rotterdam to New York saw a sharp 12% decline, down $234 to settle at $1,769 per feu.

Likewise, fares on the Shanghai-Rotterdam route fell by 4%, or $54, resulting in a fare of $1,291 per feu. Shanghai to Genoa and Los Angeles to Shanghai spot prices were both down 3% to settle at $1,932 and $846 per feu, respectively.

Rotterdam-Shanghai fares fell 1%, or $7, to reach $537 per feu. In contrast, Shanghai-Los Angeles fares increased 9%, or $152, to $1,790 per feu, and Shanghai-New York increased 5%, or $125, to reach $2,715 per feu .

Xeneta notes that the retail slowdown due to high inflation is hitting Asia and Europe hard and the return to normal following China’s return from lockdown has “lost momentum” due to geopolitical instability elsewhere.

“At times like this, retailers tend to take a more conservative approach to inventory levels while keeping a close eye on consumers’ financial health,” Xeneta noted. “Despite China’s patchy recovery, retail prices for outbound shipments to Europe have continued to fall due to well-documented overcapacity and slow demand due to high inflation.

“Ocean freight prices, meanwhile, are showing no signs of picking up – or a typical peak season for retail shippers.”

And it wasn’t good news for OOCL this month: Despite a negligible difference between tonnage carried on the transatlantic route in Q1 and Q2, revenue fell nearly 25% due to falling rates. In the Asia-Europe region, OOCL saw a 9.3% increase in volume, but sales fell almost as much, by 8.8%. OOCL’s numbers suggest a market where airlines will do more for less.

Airlines have had some luck in slowing their speeds on certain routes, but profits from this now appear to be drying up. This week Alphaliner noted that the number of decommissioned ships has increased over the past two weeks, with most ships being airlines, accounting for 93% of the total decommissioned fleet.

“As expected, the container charter market continues to lose strength,” he said Alphaliner. “Activity had dropped significantly in the last two weeks compared to previous weeks and while the general lack of fast vessels has often been cited as the reason for limited activity in certain segments, demand is now also declining, particularly in the smaller sizes, where.” Available tonnage is increasing.”

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