The freight rate falls back to the starting point!

The decline of the freight rate has not stopped, Freight to the US West Ports and the European Ports have fallen back to the rising point since 2020. The small peak shipping season before the Spring Festival may be "ruined".


                                     Freight rates fell for 23 consecutive weeks

According to the latest data released by the Shanghai Shipping Exchange, the Shanghai Export Container Freight Index (SCFI) fell 76.94 points to 1229.9 points last week, shrinking from 9.45% the previous week to 5.89%, falling for the 23rd week in a row, hitting a 28 month low since late August 2020, and freight rates on major routes fell across the board.



The SCFI index fluctuated from 800-1100 points in 2018-2019. Since 2020, it has been affected by the epidemic. Lack of labor and port congestion have caused chaos in the global supply chain. The SCFI index has risen all the way, reaching a historical high of 5109 points in the first quarter of this year. However, since the second half of this year, the freight rate has fallen continuously, and has not yet rebounded from the bottom. The industry's expectation of the shopping season at the end of this year may fall short.

As the freight rate still fails to stop falling, the market is more pessimistic. It is estimated that the demand for commodities will start to recover only after the global inflation pressure is relieved. Industry insiders predict that the era of high dividends in the container shipping market will end and the operation of shipping companies will return to normal in 2023.

Drury's latest World Container Freight Index (WCI) has recorded 39 consecutive weeks of decline. The index fell 7% in a single week and 74% annually, reaching 2404 points; Among them, the European line dropped by 18%, with an annual drop of 84%, the heaviest drop. The freight rate per large container reached 2192 US dollars, a new two-year low since October 22, 2020.


      From "one box is hard to find" to empty container stacking at the ports

             The "money printing machine at sea" was suddenly cold

It is reported that the situation of "one box is hard to find" in the past has disappeared. Instead, a large number of empty containers are piled up at the wharf, which brings pressure on port management.

Since the epidemic in 2020, the shipping market has continued to boom, and containers have become a well deserved "money printing machine" on the sea. The shipping company made boxes desperately to reach the historical peak, laying the hidden danger of overcapacity.

Since the second half of this year, with the collapse of the global transport market and the sharp drop in demand, a large number of empty containers can only be left in the yard.

The assistant director of the production business department of Guangzhou Port Co., Ltd. said, "Now the boxes are stacked on our roads, occupying many roads and heavy box areas in the port area. We try our best to explore the storage capacity."


"The level of empty containers in Nansha Port Area of Guangzhou Port is twice as much as the normal storage capacity. Now the normal empty container area is basically full."

He said, "In order to meet the demand for a large number of empty containers to return, we use various spaces to stack empty containers. We also have some space for flexible allocation, including adjusting the heavy container yard with low utilization rate and other functional sites for empty container stacking."

Like Guangzhou Port, Yantian Port, Shekou Port and other ports in South China bear the pressure of empty container stacking.

In the view of many insiders, there are multiple reasons for the large number of empty containers in the port. "Our export demand is getting less and less. Now the production of some white electricity customers in the Pearl River Delta has dropped by 30% to 40%. In the past, ports mainly provided export services for these enterprises, but now the business volume has dropped sharply." A port official said.

The person in charge of a manufacturing factory in the Pearl River Delta said that the overseas retail giants had high inventories, so there was no need to place orders. "In the first three quarters of this year, our order volume also dropped sharply, with the business volume basically dropping by 80%, and my customers basically stopped placing orders."What made him even more surprised was that, unlike the port blockades and blockades in the past, the shipping company is now ready to cancel the shipping schedule. "Recently, we have a batch of goods waiting for export, and they were directly cancelled by the shipping company."

Drury said in his latest flight cancellation analysis that 14% of flights on major container routes were cancelled between the end of November and the beginning of December.

People from ports in South China said that whether the situation of empty containers blocking the port can continue to improve depends on the speed of market recovery. It is optimistic that there will be a reversal in June 2023.

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