The cost of moving containers from China has halved in the past three months as a slump in consumer demand has hit exports.
Rates are the lowest in two years, slipping to $3,779 for a 40-foot shipping container going from Shanghai to Los Angeles – the first time it has been under $4,000 since September 2020, according to the Drewry container index.
The index measures the bi-weekly freight rate movements of 40-foot containers across seven major maritime routes.
The value of Chinese exports is expected to continue to slow down, due to factors including soaring inflation, a surging US dollar, central bank interest-rate hikes and trade disruptions due to the war in Ukraine, according to Bloomberg.
“It’s fair to say that the demand outlook for the trans-Pacific and container shipping generally is receding quickly,” said Simon Heaney, senior manager of container research at Drewry.
The Loadstar reports double-digit declines in container spot rates for Asia-Europe and transpacific routes, with further contractions expected before a bounce-back later this year.
Drewry’s Asia-North Europe index fell 10% to $6,027, while Mediterranean ports rates slumped 13%, to $6,419.
Still historically high
Despite these falls, shipping rates remain three times higher than they were pre-pandemic.
Forwarding executives are reporting that a slew of special offers are being made but are wary that rates could rise again if spare capacity is removed from the market.
Seatrade Maritime News reports a slew of falling rates, despite lines aggressively pulling ships from major trades ahead of China’s so-called ‘Golden Week’ of public holidays at the beginning of October.
The lead up to Golden Week typically sees a boost in rates, but Judah Levine, head of research at Freightos, told Hellenic Shipping News that the holiday is unlikely to offer any support to rates this year.
He noted that ocean charter rates – the price carriers pay to lease a vessel – are also falling.
“Falling spot rates could put pressure on some smaller carriers who are now stuck with expensive charter rates taken on to offer new transpacific services back when spot rates were sky high,” he said.
As previously covered in the IOE&IT Daily Update, shipping companies such as Maersk has predicted a slowdown in the second half of 2022, after two years of posting record profits during the pandemic.