Global inflation has reduced demand, the decline in freight rates has expanded, and the peak season of the container shipping market in the third quarter has been cold, but the industry is still optimistic that the market will reverse in the fourth quarter.
It is reported that the freight rate per FEU of some shipping companies in the spot market fell below the US$5,000 mark this week. Since August, the freight rate of the U.S. West line has dropped from the prefix 6 to the prefix 4, a drop of more than 20%. Industry insiders predict that the drop in freight rates means that the ships are not satisfied with the cargo, and the effect of bargaining and rushing for goods will prompt a full-scale quotation of the 4th word on the US-Western line next week.
At the same time, the freight rate per FEU on the European line fell below US$9,000 in July, and the “Battle 8” war was launched in August. Relatively speaking, many ships flocked to the east of the United States in order to avoid variables such as the Macedonian port and the labor negotiation of dock workers, supporting the freight rate of the east line. Currently, the freight rate per FEU is still around US$9,000.
Industry analysts said that high inflation in Europe and the United States has seriously suppressed consumption power, especially the Russian-Ukrainian war has pushed up energy and food inflation, European retailers and manufacturers have significantly weakened their ability to pull goods, and the consumption pattern in Europe and the United States has shifted from commodity consumption to service consumption. Consumption has led to a slowdown in the purchase of goods, and there have been concerns about order shortages from China to Vietnam and India.
According to the Global Port Tracker report compiled by the National Retail Federation, U.S. imports slowed in the second half of the year, which means that shipments in the next few months are likely to decline compared with the same period last year, and the decline will intensify next year. According to the Ho Chi Minh City Business Association of Vietnam, orders for industries such as electronics, textiles, and footwear have been greatly impacted by the slowdown in orders from Europe and the United States; India’s apparel and home textiles export orders also fell by 20%-40%, not only delaying previous orders but even reducing orders. One season order.
Compared with the peak season in the third quarter of last year, which may have only one flight every two weeks, there are flights almost every week in the third quarter of this year. This is related to the relaxation of epidemic control and the increase of terminal efficiency and the increase of available capacity when new ships are put into operation. To increase the cargo load factor, while the current profit is still high, if you do not follow up with the competition of peer price cuts, the cargo load will be lost quickly.
Some shipping companies have observed that European and American importers continue to digest inventories, and the market is expected to reverse in the fourth quarter, mainly because of the demand for seasonal commodities and the replenishment of general commodities. Currently, port congestion in Europe and the United States and worker strikes are supporting the slow decline in freight rates. Factors, the United States West Line will defend the top and bottom of 4,000 US dollars.
In addition, container shipping companies can also support high freight rates by reducing shifts and adjusting space. In the third quarter, the three major shipping alliances continued to reduce their shifts. In the fourth quarter of previous years, they usually reduced their shifts by about 15% in a single season. However, with reference to the lack of supply during the epidemic in the first quarter of 2020, the shift reduction was as high as 30%-40%.
Some experts said that although the current freight rate has fallen, compared with the ultra-low price of the past 10 years, shipping companies still have enough room for profit. Moreover, the drop in freight rates will also help to increase the willingness of some cargo owners to carry goods, especially the sources of timber and steel, which are expected to be transported from bulk carriers to container ships.