Congestion is slowing down the fall in freight rates! The European and U.S. routes will be reduced by 10% over the next five weeks!

BY: Zoe Cheung 
Despite port congestion caused by strikes and other factors, spot market rates continued to fall last week, according to data from major freight indices. Drewry statistics indicate that 76 European and American voyages were canceled during the 29th-33rd week of July 18-22, about 10% of all voyages.
In response to the decline in demand, a platform reported that shipping companies are adopting an aggressive air voyage strategy. Shipping companies will employ “other strategies,” such as slower sailings, to reduce the impact of soaring fuel prices.
According to Drewry data, 61 sailings were canceled by the three major global shipping alliances over the next five weeks (weeks 29-33). Among them, The Alliance had 23.5 canceled voyages, 2M Alliance had 20 canceled voyages, and Ocean Alliance had 17.5 canceled voyages.
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There were 758 cancellations on major routes such as the Trans-Pacific, Trans-Atlantic, Asia-North Europe, and Asia-Mediterranean between the 29th and 39th weeks. with a cancellation rate of 10%. Drewry’s data indicates that 71% of the empty sailings for this period will occur on eastbound transpacific routes, predominantly to the U.S. west coast.
The Drewry World Container Tariff Index (WCI) declined 0.7% week-on-week to $6,998.8/FEU last week, down 21% year-on-year; the Baltic Freight Index (FBX) Global Composite Index was $6,414/FEU, down 1% week-on-week; and the Shanghai Shipping Exchange’s SCFI was down 1.67% week-on-week.
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The strike launched by German port unions last Thursday and other major Nordic ports’ corporate congestion have slowed down the decline of freight rates. For example, WCI’s Shanghai to Rotterdam rate is $9,182/FEU, down 1% over last week, and FBX’s Asia to Northern Europe rate is $10,393/FEU, down 0.7% over the previous week.
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The strike by 12,000 dockworkers at the German ports of Hamburg, Bremerhaven, and Wilhelmshaven paralyzed the ports. It exacerbated the already chronic congestion at Northwest European ports, with the port of Hamburg having to wait up to two weeks before berthing before the strike.
According to the latest WCI data, spot rates from Shanghai to Los Angeles are $7,480/FEU, down 1% week-on-week and 23% year-on-year, while spot rates from Shanghai to New York are $10,164/FEU. According to FBX data, Asia-U.S. Western spot freight price of $7234/FEU, down 2% per week; and Asia-U.S. East spot freight price of $8233/FEU, up 1% per week, mainly due to New York-New Jersey port congestion, Savannah port congestion, and New York-New Jersey port congestion.
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High inventories have depleted off-dock storage space, which has led to continued port congestion, according to Judah Levine, head of research at Freightos. “With shelves and warehouses full, imports that cannot be sold will have to sit in port yards or rail hubs for extended periods.” This will take time to ease. “Congestion and freight rates are likely to decline slowly.”
The current market situation will take some time to improve as shipping companies tighten air sailings (blank sailings) and reduce the volatility of spot freight rates. It is unlikely that spot freight rates will plummet and collapse, but shipping companies will have to address the unusual market conditions, which are currently below contract rates.

Post time: Aug-04-2022