Freight rates fell for 17 consecutive weeks

 

 

 

According to the data released by Shanghai Airlines Exchange, the latest (10.14) SCFI index fell 108.95 points to 1814 points, a drop of 5.7%, 65% from the peak at the beginning of the year.

The freight rates of the four major routes in Europe and the United States dropped directly, with the weekly drop of more than 12% on the American Western route and the European route, and the drop from the peak was 74% and 67% respectively.

 

Last week, the freight rate per FEU on the US West Line fell by US $302 to US $2097, or 12.5%;

 

Each FEU of the US East Line fell by 343 dollars, and the loss of 6000 yuan fell to 5816 dollars, a decline of 5.6%.

 

For the European line, each TEU fell by $369 to $2581, a decline of 12.5%;

 

The Mediterranean line fell by $252 per TEU to $2747, or 8.4%

 

The freight rate of South America Line (Santos) per TEU rose by $95 to $5120, or 1.89%;

 

The freight rate of Persian Gulf Line per TEU rose by 295 dollars to 1171 dollars, or 28.40%.

 

Industry analysis points out that although the SCFI index has fallen for 17 weeks, the decline last week did not increase because of the Golden Week, but narrowed down from the average weekly decline of nearly 10% in previous weeks.

 

The freight rates of routes such as the Persian Gulf and South America have rebounded, and the freight rates of the Asian line have also stabilized. It is estimated that the freight rates of the European and American lines will not fall too much in the off-season of the fourth quarter, while the freight rates of the Asian line will be supported in the peak season.

 

Influenced by interest rate rise, inflation, war, epidemic situation and other factors, the demand in Europe and the United States slowed down rapidly, but at the same time, the market released a large amount of transport capacity, mainly from the relief of the port and the launching of new ships. At present, the congestion problem has been eased by half compared to the beginning of the year, which means that freight rates will soon return to normalization.

 

The freight rate may drop to the pre epidemic level by the end of the year

 

According to the latest research report of HSBC, due to the faster than expected drop in freight rates and the easing of port congestion, the spot freight rate of container transport may drop to the level of 2019 at the end of this year at the earliest.

 

Last Wednesday, the global bank lowered its demand forecast for 2023 and raised its transport capacity supply forecast for 2022-2024 to reflect that the easing of port congestion is releasing the constrained transport capacity to the market.

 

"Therefore, we now expect that the Shanghai Container Freight Index (SCFI) will bottom out in the middle of 2023, and the profitability of the shipping industry will bottom out in the second half of 2023." Parash Jain, Head of HSBC Shipping, Ports and Asian Transport Research, wrote in the Global Container Shipping Report. Previously, it predicted that the ocean freight would reach the bottom in 2024.

 

 

With such a sharp drop in freight rates, HSBC reported that in the next two years, there will be "significant downside risks" to the profit level of shipping companies. The bank expects that the profits of shipping companies in the third quarter of this year will remain flexible, but from the fourth quarter, the profits will decline and continue to 2023.

 

Shipping company: I didn't expect to earn more this year

 

"Winter comes again after spring and autumn. The rise and fall of freight rates will never end. If it is high, it will look at supply and demand at a low level. If it is high, it will look at supply and demand at a low level. It will not be possible until inflation slows down and the decline reverses." Xie Huiquan, General Manager of Evergreen Shipping, uses a poem to describe his views on the shipping market

 

Xie Huiquan said recently that the market originally thought that 2021 would be the peak of the centralized transportation industry, but unexpectedly, this year's profit would be better. The overall market revenue in the first half of this year was very impressive, which can be said to be the best half year in history.

 

In the face of falling freight rates and reduced demand, Xie Huiquan believes that the container shipping market is returning to normal after three years of madness, but the future outlook is not pessimistic.

 

However, due to the rise of the US dollar, high inflation and the war between Russia and Ukraine, the traditional peak season in the third quarter was flat, and the revenue also declined compared with the previous two quarters. It is estimated that the revenue will continue to decline in the fourth quarter. Although the performance in the third and fourth quarters was not as good as originally expected, there were still good results throughout the year, even better than last year.

 

Looking forward to next year, Xie Hui's full name indicates that the quality of the centralized transport market still depends on the supply and demand situation, and the demand side depends on the evolution of the US dollar, inflation and the war between Russia and Ukraine. However, the global economy is currently estimated to maintain a positive growth rate. The International Monetary Fund (IMF) predicts that the GDP growth rate next year will be 2.7%;

 

As for the supply side, it is estimated that the delivery of new ships will increase by 8.2%, and the relief of the port will release 5-7% of the space, but the new carbon emission regulations will take effect next year, which may absorb 10% of the transport capacity.

 

Moreover, 8.2% of new ship delivery is not in place at one step, so the actual supply increase is not so serious. Therefore, the market in 2023 is relatively conservative, but not pessimistic。