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Oct 13,2021

Shipping prices plunged: 3 days to 3 months increase, popular shipping routes plummeted 22%

Recently, the price of Ocean freight services from China to the US West has experienced a sharp correction, which has attracted market attention. Compared with the high of US$20,586/FEU (40-foot container) on September 10, it has fallen by nearly US$5,000, a decline of 22.25%. Some freight companies even stated that the sea freight from Ningbo Port and Shanghai Port to the West Coast of the United States dropped by a three-month increase in three days!

 

In recent years, the new crown epidemic has disrupted the global shipping chain and congested terminals in many overseas countries, leading to high global shipping rates. Take the China-US route as an example. The China-Western US route has risen from the usual US$5,000 to US$22,000. Many small and medium-sized foreign trade companies complain that the value of goods with low added value cannot even cover the freight. Recently, shipping prices on some routes such as China and the United States have corrected, but they are still at a high level compared to before the epidemic.

Ocean freight services

Recently, the Baltic Sea Freight Index (FBX) data shows that the global container freight index has fallen from US$11,109 on September 10 to US$9,949 on October 8.

 

Among them, the biggest decline is the popular route China/East Asia-West America. The index price has fallen for four consecutive weeks. It was 20,586 USD/FEU on September 10, and fell to 16,044 USD/FEU on October 8, a drop of nearly 5,000 USD. 22.25%.

 

The reporter noticed that not all routes have dropped in freight rates. According to data from the Shanghai Shipping Exchange, as of October 8, China’s export container freight index rose 1.6% from the previous period. The highest increase was 8.6% on Southeast Asian routes, Route 7.0%. Among them, the West America route, the Mediterranean route and the South Africa route fell 3.7%, 1.6% and 1.1% respectively.

The market view believes that the freight rate adjustment of the popular Ocean freight services route indicates that the apex of shipping freight rate is approaching. The research report of CICC pointed out that CMA CGM recently announced that it would stop raising spot freight rates from September to February next year. In the fourth quarter, the traditional peak season is gradually coming to an end. CICC believes that the peak of freight rates may be approaching. The accumulated volume in the supply chain nodes may still take 1-2 quarters, so the industry will return to normalization or in the first quarter to the third quarter of 2022.

 

If the double limit policy has a substantial impact on production activities and shipments, it may accelerate the arrival of the inflection point. On the other hand, CICC believes that the security and reliability requirements of the supply chain may prompt more head customers to sign long-term freight rates, and the acceptance of freight rates will also be higher than the level before the epidemic.

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