On October 6, the spot freight rate of the Baltic Container Freight Index (FBX) from Asia to the West Line of the United States (FBX01) was $2145/FEU (i.e., 40-foot container), while on September 30, the freight rate was $2943/FEU, a sharp drop of 27% within a week, Compared with the peak in May this year, it dropped by 87% (the spot freight rate on May 3 was 16346 US dollars/FEU. You know, a year ago, when one box and one cabin were hard to get, the premium from Asia to the western United States was more than 20000 US dollars.
The global container freight index (WCI) of Deloitte also fell all the way. On October 6, the freight rate of the route from Shanghai to Los Angeles was 2995 US dollars/FEU, down 9% within a week and 73% year on year.
According to some media reports, despite the drastic reduction of shipping capacity by shipping companies and the launch of air navigation, less than three-quarters of ships from Asia to the West Coast of the United States are fully loaded, and the spot price of containers is expected to fall below $2000/FEU next week.
Unless the shipping company takes more radical action to cut more capacity on the line from Asia to the United States and West, the freight rate may fall to the level before the outbreak of the new crown disease before the contract is renewed (in contrast, the FBX01 freight rate on October 7, 2019, was $1327/FEU), which will weaken the shipping company's negotiating position on the route. In addition, during this period, it is said that some direct customers (BCOs) can obtain temporary rate reductions from the shipping company to ensure cooperation because the contract price is four times higher than the spot market. For example, at the beginning of September, Zhang Shaofeng, the operation officer of Yangming Maritime Business, admitted that there were customers who asked to modify the contract. Because the company did not ask to modify the contract when the freight rate rose in the past, and some long-term customers did not ask to modify the contract when the freight rate plummeted. For customers who asked to modify the contract, Yangming Maritime first gave short-term preferential prices.
Peter Sand, the chief analyst of Xeneta Company, said that the rate collapse on the route was quite dramatic: For a long time, the cargo owner almost faced a desperate situation in the contract negotiation, but the market changes much faster than many people expected. A few months ago, the money for shipping one container can now be shipped to three.
The freight rate from Asia to the United States and Western Europe fell continuously, and the freight rate from Asia to Europe also fell. On October 6, the Baltic Sea container freight index from Asia to Northern Europe (FBX11) was 6287 dollars/FEU, and on September 30, the data was 7125 dollars/FEU, down 12%; On October 6, the line from Asia to the Mediterranean (FBX13) was $5825/FEU, and on September 30, it was $6328/FEU, down 8%.
At the same time, this week, the WCI index from Shanghai to Rotterdam (i.e. Northern Europe) fell 13% to USD 4724/FEU, and from Shanghai to Genoa (i.e. Mediterranean) fell 6% to USD 4912/FEU. Compared with last year, the spot freight rate of the Shanghai Rotterdam line decreased by 68%, still 50% higher than that in October 2020.
However, a British carrier contact revealed to The Loadstar that the booking prospect from Asia to Northern Europe in the next few weeks was daunting: Except when the new champion epidemic was just prevailing, I don't remember when the market changed so fast and there was no sign of improvement. In fact, the shipping company was not in a hurry to let the ship return to Asia. During the second 8-day strike held in Felixto Port, Britain, 2M Alliance left MSC Erica with a capacity of 19224TEU in the port, which proved that EverGolden with a capacity of 20338TEU was accompanied by Ocean Alliance.
In order to cope with the situation that the container shipping market is not prosperous in the peak season, shipping companies have continuously reduced their capacity to save the market. During the golden week in previous years, shipping companies have reduced their shifts, but most of them have reduced their shifts in the first two weeks of October. This year, they have reduced their shifts throughout the month. According to the weekly capacity report of Deluli, from the 41st week (October 10-16) to the 45th week (November 7-13), 77 flights across the Pacific, transatlantic, Asia to Nordic and Mediterranean routes were canceled, accounting for about 10% of the planned flights. Among them, 60% of air routes were located on the trans-Pacific route, 25% on Asia to Nordic and Mediterranean routes, and 15% on the transatlantic westward route.
For shipping companies, the only bright spot is the transatlantic route. At first, the freight rate of this route lagged behind that of the trans-Pacific route and the Asia-Europe route. But last year, the freight rate soared sharply, rising from $1800/FEU to a high of $8500/FEU in August this year. On October 6, the Baltic Sea container freight index from Northern Europe to the Eastern United States (FBX22) was still $7736/FEU. According to the WCI index, only the transatlantic route was in an upward trend in the past week. The Rotterdam New York line (that is, from Northern Europe to the Eastern United States) rose by 4%, up 17% compared with the same period last year.
According to Dell's analysis, the shipping company is in the transition period from insufficient transport capacity to declining demand, which means that the shipping company must put transport capacity management in the first place to support freight. The major shipping companies have even terminated the loop line on the trans-Pacific route. However, shippers and direct customers still face supply chain delays, especially in transatlantic trade. Due to supply chain bottlenecks and relatively small trade on this route, relatively few shipping companies control most of the market, and spot freight rates are still high.
Corresponding to the launch of air navigation by the shipping company, the first container ship to be dismantled this year also became news. In the recent two years, almost all new and old ships have been put into actual operation due to the high freight rate. This year, no container ships have been sold and scrapped. However, on September 25, RCL, a shipping company in Asia, sold its container ship Mathu Bhum for disassembly and recycling. The Mathu Bhum was built in 1990 with a capacity of 1248TEU, and the estimated sales price may exceed 3.1 million dollars. According to Alphaliner data, only 19 ships will be demolished in 2021, totaling 16500 TEU.
2016 was a historical high point for container ship dismantling, with more than 600000 TEU of capacity recovered. At that time, the trans-Pacific freight rate was higher than US $1100/FEU on average. With the continuous decline of freight rates and rents, as well as stricter carbon emission reduction laws and regulations, Alphaliner estimates that container ships with a capacity of more than 250000 TEU may be demolished by 2023.
This article is from the Internet and does not constitute an investment proposal. If you have any objection to this article, please contact our colleagues and we will deal with it as soon as possible after verification.