In fact, from the end of 2021, there are signs of "cooling down" in seaborne prices. This year, however, the decline in ocean freight rates has suddenly turned sharp and rapid.
On September 27, the Freightos Baltic Container Freight Index (FBX) showed that the global container freight rate was US$4,085/FEU. You know, on September 13 last year, the global container freight rate once soared to US$11,134.44/FEU, and the current freight rate is only equivalent to the freight rate in January last year. Based on this estimate, the global container freight rate has dropped by 63% from a high level so far.
Talking about the current drop in shipping freight rates, Zhang Yongfeng, chief consultant of Shanghai International Shipping Research Center, said in an interview with a 21st Century Business Herald reporter that although spot freight rates for international container shipping have fallen more than last year's highs, the overall level is still higher than the pre-epidemic level. , "From the perspective of the industry cycle, the container shipping market was already in the stage of bottoming out before the epidemic, and it was greatly affected by the epidemic in the past two years. The current drop in freight rates is also a normal fluctuation, which is a relatively rational callback."
Although many interviewed experts believe that this wave of market prices is a normal return after the previous price surge, it is still quite rare that the "peak season is not busy" combined with a sharp drop in freight rates.
Zhang Yongfeng said: "In the past, most of the months from July to October were the traditional peak season for container exports, and the export demand was relatively high, but this year's 'peak season' is mainly due to the unsatisfactory performance of external demand."
He further said that this phenomenon is mainly caused by the following factors: "First, Europe and the United States have continued to replenish inventories, and commodity inventories are high. For example, the three major inventory indicators in the United States are at high levels; second, the Federal Reserve continues to raise interest rates. Due to the cancellation of epidemic subsidies, global liquidity has tightened, and major economies in the world have been deeply affected by rising raw material and energy prices and high inflation, and consumer demand has been greatly impacted. The proportion of imported goods in China; in addition, the overall congestion of overseas ports has eased, the ship turnover rate and punctuality rate have increased rapidly, and the ship loading rate has declined, all of which have prompted a correction in shipping prices."
In Chen Zhen's view, factors such as the mismatch between supply and demand of transportation capacity, supply chain tensions, and continued foreign inflation will continue to affect the global container shipping market. He said that even if the seaborne market price falls further in the future, it is normal, because although the current overall freight rate has fallen below the level of the same period in 2021, it is still much higher than the level of the same period before 2020.
Judging from the data, in 2019 before the outbreak, the global average Baltic Container Freight Index (FBX) was about US$1,400/FEU. It can be seen that although the current shipping price has fallen, it is still a lot higher than the price at that time.
Although ocean freight rates have returned to rationality, the lack of external demand has become a new concern for many freight forwarding companies. The person in charge of a freight forwarding company in Guangzhou told the 21st Century Business Herald reporter that what he is most worried about at present is the continued weakness in external orders.