Spot rates for container freight on main lanes between leading Northern Hemisphere markets are in free fall, with demand continuing to slow and rate depreciation following in its wake.
In the latest figures coming out of London, the World Container Index (WCI) compiled by supply chain advisory Drewry shows a drop of 6% and 5% respectively for Asia-US and Asia-North Europe cargo.
WCI’s last measured forty-foot rate of $6 127 on the US West Coast is 46% lower than last year.
Rates for Northern Europe show a similar decline – 42% down year-on-year (y-o-y) to the current rate of $8 010 per FEU.
Prior to the current steep declines, spot rates for these sectors were steadily decreasing by about 10% over five weeks for US West Coast rates and 10% over eight weeks for Northern Europe, suggesting a sharp slowdown in demand for container freight.
It is furthermore predicted that Transpacific rates will drop by 72% to $4 900 per FEU in September, with less than a month to go before China’s bumper shopping Golden Week spree starts on October 1.
Drewry’s figures confirm what Alan Murphy, CEO of maritime consultancy Sea-Intelligence, said recently when he stated that average vessel utilisation on the major head-haul trades was below the threshold that had fuelled the record rate peaks over the past year and a half.
Not long thereafter, Emily Strausbell, a market analyst at freight rate bench marker Xeneta, pointed out that spot rates may have peaked following a rates bonanza brought on by markets recovering from Covid supply-chain pressures.
SOURCE: The Loadstar.
