Freight rates are starting to fall, container freight rates may have peaked, cargo volume is surging! Customs clearance is difficult! Ports are in crisis! 丨 Foreign Trade News Express
Freight rates begin to fall, container freight rates may have peaked
Recently, due to the turbulent situation in the Red Sea, shipping companies were forced to detour to Africa, and spot freight rates rose sharply. After rising for 13 consecutive weeks, the Shanghai Containerized Freight Index (SCFI) fell slightly by 1.6% to 3674.86 points last week, breaking the previous upward trend. While the SCFI index fell, the Drewry World Container Index slowed down its growth to only 1% this period after jumping 10,000 points in the previous period. Overall, the container shipping market has shown some signs of adjustment after a long period of growth.
Industry insiders pointed out that although the SCFI rose slightly to 3733.8 points this week, an increase of only 19.48 points from last week, an increase of only 0.52%, this change marks a turning point in the freight rate market and may start a new round of adjustments and corrections.
The latest Shanghai Containerized Freight Index (SCFI) was released on July 12. The index fell significantly, down 58.94 points to 3674.86 points, a weekly decline of 1.57%, thus ending the previous 13-week upward trend.
Among the four major routes, the freight rates showed a divergent trend. Except for the Far East to Europe route, the other routes all experienced varying degrees of decline. In particular, the US West Coast route, due to the temporary increase in capacity, saw the most significant decline in freight rates, with a drop of 5.5%, becoming the route with the most volatile decline in freight rates among the four major routes.
On the 1st of this month, the container shipping market originally planned to increase the price of each large container by US$1,000 to US$8,100-8,500 on the US West Coast route. However, due to the introduction of overtime ships and new routes, the industry leader Mediterranean Shipping (MSC) chose to maintain the original price of US$7,500. Subsequently, last Saturday (7th), most shipping companies lowered their freight rates to US$7,900, and most freight rates have now further dropped to US$7,500.
Linerlytica analyzed in its latest weekly report: "Although carriers successfully pushed for a rate increase on July 1, the additional capacity in the US West Coast, Northern Europe, South America and the Middle East effectively relieved the pressure on these routes, resulting in cracks in the ability of shipping companies to raise prices further."
Despite this, the agency predicts that freight rates will remain high until the end of the peak season, which may extend until September. Judging from the current weekly freight rate trend, the market is gradually making price corrections, but there will not be a sharp drop or flash crash. It is expected that freight rates will continue to show a slow downward trend throughout July.
Senior executives of the freight forwarding industry and shipping giants have revealed that the market structure is undergoing significant changes recently. With the increase in overtime ships and the continuous opening of new routes, freight rates on the West Coast of the United States have gradually fallen from the peak of US$8,500 in early July to the current level of US$7,500.
It is worth noting that some large freight forwarding companies have relied on long-term low-price contracts with shipping companies.It can even undertake business at a price lower than US$7,000, indicating that market freight rates may see a more significant downward trend next week.
In view of the current situation of oversupply of space in the market, large and super-large freight forwarding companies have taken the initiative to adopt price reduction strategies to stimulate shipments, showing their willingness to make concessions. However, to obtain freight rates far below the general market price, two conditions are usually required: one is to establish a long-term and good cooperative relationship with the freight forwarding company, and the other is to be a frequent customer with large shipments.
It is worth noting that when the freight rate is lower than 7,000 USD in the market, this move is likely to have an impact on the spot market and shake the price stability. Based on this, some freight forwarding companies predict that the reduction in FAK (flat rate) prices next week may be further expanded.
Currently, freight rates on the US East Coast route are stable at between US$9,800 and US$10,400 per container, while freight rates on the European route remain at between US$8,700 and US$9,000 per container.
The market is taking a wait-and-see attitude towards the loosening of freight rates and whether there will be adjustments. Freight forwarding companies are still waiting for new quotations from shipping companies in the past two days. It is worth noting that the price increase plan originally scheduled for the middle of this month has been cancelled under the leadership of Mediterranean Shipping.
In addition, for the near-sea routes, the freight rate per box on the Southeast Asia route (Singapore) was US$753, up US$23 from the previous week, a 3.15% increase; the freight rate per TEU from the Far East to Kansai and Kanto, Japan was the same as the previous period, and the freight rate per TEU from the Far East to South Korea fell by US$4.
Looking at specific trade routes, the last period's European Container Freight Index (SCFI) assessment value showed its first weekly decline since mid-April, down 0.5%, mainly due to the two consecutive weeks of decline in average capacity utilization, although the latest European freight rates rebounded.
Johnson Leung, co-founder of Linerlytica, pointed out that freight rates on the Asia-Europe route have shown signs of peaking, and freight forwarders have obtained more space in the new services launched this month. He further explained: "According to utilization data, the newly opened Asia-Europe routes last week have led to an unprecedented downturn in Asian routes. The utilization rates of French Peak, a subsidiary of CMA CGM, and CGX, a subsidiary of Hapag-Lloyd, are far below the recent average level of Asia-Europe routes."
Asian shipping companies have expressed concerns about this, with one shipping company saying that "shipping companies are about to collapse", emphasizing that this year's shipping boom is fundamentally different from the boom during the COVID-19 pandemic. An executive of a non-vessel operating common carrier (NVOCC) revealed that although freight rates in most regions remain strong, freight rates from China to the Middle East have fallen by one-third in the past four weeks, while freight rates from Asia to Northern Europe have "stagnated".
On the trans-Pacific route, investment bank Jefferies noted that although freight rates from Asia to the West Coast of the United States remain at annual highs, close to $8,000 per foot of container, market signs indicate that booking prices for late July to August will fall back to around $7,000 per foot of container.
Several experts in the container shipping consulting field have also expressed their views on this. Lars Jensen, CEO of Vespucci Maritime, believes that unless there are new major failures in the supply chain, such as increased port congestion, Canadian railway strikes or the expansion of the Red Sea crisis, July is likely to be the peak of the current freight rate increase. However, he also warned that the deadlock in contract negotiations among dock workers on the East Coast of the United States may trigger a wave of strikes in the fall, becoming a new round of uncertainties affecting freight rates.
Deutsche Bank analyst Andy Chu bluntly stated that there is a bubble in the current container shipping market, and the increase in freight rates has exceeded historical levels outside the COVID-19 pandemic, which is incomprehensible.
However, not all analysts are pessimistic. Emily Stausbøll, senior shipping analyst at Xeneta, pointed out that its data showed that the average spot freight rates on the main routes to Asia will continue to rise in mid-July, which is consistent with the record global demand for shipping container transportation in May. She believes that as long as shippers believe that they must pay more to secure cargo space, spot freight rates will continue to climb.
Simon Heaney of British consulting firm Drewry and Dan Nash of Veson Nautical expressed similar views, believing that freight rates will be affected by port congestion and equipment supply, while current demand remains strong and no fundamental changes are expected this year.
In addition, congestion at the Port of Singapore has continued to ease since May, with ships waiting for berths significantly shortened, but ports in other regions, such as near the Cape of Good Hope, have been hampered by severe weather conditions that have hampered container transport, further complicating global shipping.
Freight rates begin to fall, container freight rates may have peaked
Recently, due to the turbulent situation in the Red Sea, shipping companies were forced to detour to Africa, and spot freight rates rose sharply. After rising for 13 consecutive weeks, the Shanghai Containerized Freight Index (SCFI) fell slightly by 1.6% to 3674.86 points last week, breaking the previous upward trend. While the SCFI index fell, the Drewry World Container Index slowed down its growth to only 1% this period after jumping 10,000 points in the previous period. Overall, the container shipping market has shown some signs of adjustment after a long period of growth.
Industry insiders pointed out that although the SCFI rose slightly to 3733.8 points this week, an increase of only 19.48 points from last week, an increase of only 0.52%, this change marks a turning point in the freight rate market and may start a new round of adjustments and corrections.
The latest Shanghai Containerized Freight Index (SCFI) was released on July 12. The index fell significantly, down 58.94 points to 3674.86 points, a weekly decline of 1.57%, thus ending the previous 13-week upward trend.
Among the four major routes, the freight rates showed a divergent trend. Except for the Far East to Europe route, the other routes all experienced varying degrees of decline. In particular, the US West Coast route, due to the temporary increase in capacity, saw the most significant decline in freight rates, with a drop of 5.5%, becoming the route with the most volatile decline in freight rates among the four major routes.
On the 1st of this month, the container shipping market originally planned to increase the price of each large container by US$1,000 to US$8,100-8,500 on the US West Coast route. However, due to the introduction of overtime ships and new routes, the industry leader Mediterranean Shipping (MSC) chose to maintain the original price of US$7,500. Subsequently, last Saturday (7th), most shipping companies lowered their freight rates to US$7,900, and most freight rates have now further dropped to US$7,500.
Linerlytica analyzed in its latest weekly report: "Although carriers successfully pushed for a rate increase on July 1, the additional capacity in the US West Coast, Northern Europe, South America and the Middle East effectively relieved the pressure on these routes, resulting in cracks in the ability of shipping companies to raise prices further."
Despite this, the agency predicts that freight rates will remain high until the end of the peak season, which may extend until September. Judging from the current weekly freight rate trend, the market is gradually making price corrections, but there will not be a sharp drop or flash crash. It is expected that freight rates will continue to show a slow downward trend throughout July.
Senior executives of the freight forwarding industry and shipping giants have revealed that the market structure is undergoing significant changes recently. With the increase in overtime ships and the continuous opening of new routes, freight rates on the West Coast of the United States have gradually fallen from the peak of US$8,500 in early July to the current level of US$7,500.
It is worth noting that some large freight forwarding companies have relied on long-term low-price contracts with shipping companies.It can even undertake business at a price lower than US$7,000, indicating that market freight rates may see a more significant downward trend next week.
In view of the current situation of oversupply of space in the market, large and super-large freight forwarding companies have taken the initiative to adopt price reduction strategies to stimulate shipments, showing their willingness to make concessions. However, to obtain freight rates far below the general market price, two conditions are usually required: one is to establish a long-term and good cooperative relationship with the freight forwarding company, and the other is to be a frequent customer with large shipments.
It is worth noting that when the freight rate is lower than 7,000 USD in the market, this move is likely to have an impact on the spot market and shake the price stability. Based on this, some freight forwarding companies predict that the reduction in FAK (flat rate) prices next week may be further expanded.
Currently, freight rates on the US East Coast route are stable at between US$9,800 and US$10,400 per container, while freight rates on the European route remain at between US$8,700 and US$9,000 per container.
The market is taking a wait-and-see attitude towards the loosening of freight rates and whether there will be adjustments. Freight forwarding companies are still waiting for new quotations from shipping companies in the past two days. It is worth noting that the price increase plan originally scheduled for the middle of this month has been cancelled under the leadership of Mediterranean Shipping.
In addition, for the near-sea routes, the freight rate per box on the Southeast Asia route (Singapore) was US$753, up US$23 from the previous week, a 3.15% increase; the freight rate per TEU from the Far East to Kansai and Kanto, Japan was the same as the previous period, and the freight rate per TEU from the Far East to South Korea fell by US$4.
Looking at specific trade routes, the last period's European Container Freight Index (SCFI) assessment value showed its first weekly decline since mid-April, down 0.5%, mainly due to the two consecutive weeks of decline in average capacity utilization, although the latest European freight rates rebounded.
Johnson Leung, co-founder of Linerlytica, pointed out that freight rates on the Asia-Europe route have shown signs of peaking, and freight forwarders have obtained more space in the new services launched this month. He further explained: "According to utilization data, the newly opened Asia-Europe routes last week have led to an unprecedented downturn in Asian routes. The utilization rates of French Peak, a subsidiary of CMA CGM, and CGX, a subsidiary of Hapag-Lloyd, are far below the recent average level of Asia-Europe routes."
Asian shipping companies have expressed concerns about this, with one shipping company saying that "shipping companies are about to collapse", emphasizing that this year's shipping boom is fundamentally different from the boom during the COVID-19 pandemic. An executive of a non-vessel operating common carrier (NVOCC) revealed that although freight rates in most regions remain strong, freight rates from China to the Middle East have fallen by one-third in the past four weeks, while freight rates from Asia to Northern Europe have "stagnated".
On the trans-Pacific route, investment bank Jefferies noted that although freight rates from Asia to the West Coast of the United States remain at annual highs, close to $8,000 per foot of container, market signs indicate that booking prices for late July to August will fall back to around $7,000 per foot of container.
Several experts in the container shipping consulting field have also expressed their views on this. Lars Jensen, CEO of Vespucci Maritime, believes that unless there are new major failures in the supply chain, such as increased port congestion, Canadian railway strikes or the expansion of the Red Sea crisis, July is likely to be the peak of the current freight rate increase. However, he also warned that the deadlock in contract negotiations among dock workers on the East Coast of the United States may trigger a wave of strikes in the fall, becoming a new round of uncertainties affecting freight rates.
Deutsche Bank analyst Andy Chu bluntly stated that there is a bubble in the current container shipping market, and the increase in freight rates has exceeded historical levels outside the COVID-19 pandemic, which is incomprehensible.
However, not all analysts are pessimistic. Emily Stausbøll, senior shipping analyst at Xeneta, pointed out that its data showed that the average spot freight rates on the main routes to Asia will continue to rise in mid-July, which is consistent with the record global demand for shipping container transportation in May. She believes that as long as shippers believe that they must pay more to secure cargo space, spot freight rates will continue to climb.
Simon Heaney of British consulting firm Drewry and Dan Nash of Veson Nautical expressed similar views, believing that freight rates will be affected by port congestion and equipment supply, while current demand remains strong and no fundamental changes are expected this year.
In addition, congestion at the Port of Singapore has continued to ease since May, with ships waiting for berths significantly shortened, but ports in other regions, such as near the Cape of Good Hope, have been hampered by severe weather conditions that have hampered container transport, further complicating global shipping.
The volume of cargo has increased! It is difficult to clear customs! The port is in crisis!
According to the latest news, the JNPT terminal at Nhava Sheva Port is suffering from severe congestion. The Nhava Sheva Port terminal is experiencing congestion of container vehicles, which has extended the time of entering and leaving the terminal by 6-8 hours, seriously affecting the entire import and export cycle.
01Difficulty in port customs clearance
Container freight stations complain about difficulties in customs clearance, and high inventory levels exacerbate operational pressures. At the same time, Mundra Port also faces efficiency issues, and improving port operations and cross-departmental collaboration has become a top priority.
Congestion is particularly severe at APM Terminals’ Gateway of India (GTI) and DP World-operated Nhava Sheva International Container Terminal (NSCIT).Become the focus of industry attention.
Container truck drivers have been experiencing significantly longer delays entering and exiting container areas, causing chaos in the pick-up and unloading process, a phenomenon that has become particularly prominent in the past few weeks.
The Nhava Sheva Container Operators Association (NSCOWA) in an official notice clearly pointed out that the continued congestion has caused an average delay of 6 to 8 hours for each import, export and empty container when passing through the NSICT and GTI terminals, seriously disrupting the overall import and export cycle.
In addition, the owners of the container freight station (CFS) at the Port of Nava Sheva have also complained that they are having difficulty in clearing their cargo from the terminal.This dilemma has undoubtedly increased the financial burden on cargo owners.
The Container Freight Stations Association of India (CFSAI) expressed great concern and pointed out that all port terminals reported high inventory levels, further exacerbating the overall operational pressure.
02 Causes of port congestion
The sharp increase in cargo volume and the instability of ship operating schedules are the key reasons for this predicament.
With the surge in container volumes and the influx of cargo, the Port of Nawahiwa was overwhelmed.
According to industry sources, the port and its main operators have difficulty coping with the frequent changes in docking windows for various ships, resulting in a serious capacity shortage.
NSCOWA, the organisation representing the local container trailer industry, stressed that the delays were not the fault of its member transporters but were caused by a combination of factors.
Despite the Association and other stakeholders actively informing the industry through daily traffic advisories, delays have had a significant impact on importers' delivery schedules.
Carrier officials noted that addressing the issue will require greater efforts at the port and terminal levels in cargo flow planning and coordination.
Industry insiders further analyzed that the complexity of long-distance transportation to southern Africa and delays at the previous port of call resulted in frequent changes in the estimated time of arrival (ETA), posing a huge challenge to major terminal operators in arranging ship berthing windows.
At the same time, the railway capacity of Mundra Port has also been affected due to the decline in turnover efficiency. The two ports together bear most of India's container freight tasks, but now they are experiencing serious congestion.This has brought unprecedented pressure to import and export traders.
Local transport companies have strongly called for strengthened coordination and cooperation at the port and terminal levels and more effective planning and management of cargo flows in order to alleviate the current traffic congestion.
At the same time, the government should also attach great importance to port infrastructure construction and operational efficiency to provide support for the smooth development of India's trade.
For cargo owners and shippers, this continued congestion is undoubtedly another severe test. We hope that the relevant local departments can take effective measures as soon as possible to alleviate the current difficulties and maintain smooth trade.
Maersk adjusts booking window for Asia routes
Maersk Line recently officially announced that starting from July 15, 2024, an important adjustment will be made to its booking service for Asian routes, that is, the original booking window period will be adjusted to 28 days. This move means thatBookings outside the new booking window will not be accepted after July 15, 2024。
It is worth noting that this adjustment is specifically aimed at several key routes departing from Asia, including but not limited to the West Coast and East Coast of North America, the West Coast and East Coast of South America, Northern Europe, the Mediterranean, East and West Africa, and South Africa, as well as West Asia, Central Asia (including the Middle East and India), New Zealand and Australia. This comprehensive coverage strategy demonstrates Maersk's determination to improve the efficiency and service of the global logistics network.
Maersk said the booking window starts from the date the customer’s booking is received until the vessel’s estimated time of departure (ETD).
In the first half of the year, foreign trade in many provinces and cities in my country hit a record high
Recently, the national customs have successively released regional foreign trade data. In the first half of this year, many regions, provinces and cities in my country set new historical highs for the same period. The import scale of goods trade in Beijing-Tianjin-Hebei, Guangdong-Hong Kong-Macao, the three northeastern provinces, Anhui in the central region of my country, and Guangxi in the western region all set new historical highs. Especially in terms of exports, in the first half of the year, the year-on-year growth rate of my country's goods trade exports continued to rebound to 6.9%. From the perspective of growth momentum, it has a significant role in boosting the economy.
U.S. plans to release proposed rules for Chinese connected cars in August
According to Reuters on the 16th, Alan Estevez, deputy secretary of the U.S. Department of Commerce for industry and security, mentioned at a forum in Colorado on Tuesday that the departmentProposed rules for connected cars, scheduled to be released in August, are expected to impose restrictions on software designed and developed by China and other countries that the United States views as competitors.
The report said that what Estevez revealed, as the director of export control at the U.S. Department of Commerce, is the clearest information so far about the U.S. government's action plan against Chinese cars.
The tax era in the Philippine e-commerce sector will officially begin
According to a comprehensive report by Philippine media on July 10, Philippine legislators recently passed a bill to impose value-added tax (VAT) on foreign digital service providers, requiring all non-resident digital service providers to register with the Philippine Bureau of Revenue (BIR).It also imposes a 12% value-added tax on all digital transactions by its customers in the Philippines.The move is aimed at achieving fair competition in the market between online and local service providers.
The digital services covered by the bill include search engines, online markets, cloud services, etc., affecting international e-commerce companies including Amazon and Shein and well-known streaming platforms including Netflix, HBO, and Disney.
According to the Tax Memorandum (RMC) No. 55-2024 issued by the BIR on April 15 this year, related companies enjoy an additional 90-day compliance extension, with a deadline of July 14, 2024. E-commerce sellers need to complete BIR registration and ensure tax compliance to avoid suspension of services. Philippine Congressman Joey Salceda said the measure could bring in up to 18 billion pesos (US$307 million) in revenue in the first year. The Philippine Department of Finance estimates that the measure could increase the Philippine government's revenue by about 84 billion pesos between 2024 and 2028.
Vietnam raises export tax rates for 18 categories of products
According to Vietnam's Customs Online, the General Department of Vietnam Customs will set new export tax rates for 18 categories of products from 0:00 on July 1, 2024, and the export tax rate will be increased from the previous 25% to 30%.
The HS code of the products involved is:
2515.11.00；2515.12.10.90；2515.12.20；2515.20.00.90；2516.11.00；2516.12.20；2516.20.10；2516.20.20；2516.90.00；2517.10.00.10；2517.10.00.90；2517.20.00；2517.30.00；2517.41.00.30；2517.41.00.90；2517.49.00.30；2517.49.00.90；2521.00.00。
India postpones implementation date of quality control order for 4 types of polymer products
Recently, the Indian Ministry of Chemicals and Petrochemicals issued an announcement after consultation with the Bureau of Indian Standards (BIS), deciding to postpone the implementation date of the quality control order for four types of polymer products. The relevant quality control order was originally issued on December 6, 2023 and was originally scheduled to take effect on June 3, 2024. The table below shows the effective dates and corresponding standard requirements for these four types of polymer products.
After the quality control order officially comes into effect, the above-mentioned products must comply with Indian standards and be certified by the Bureau of Indian Standards and affixed with a certification mark, otherwise they shall not be produced, sold, traded, imported or stored.
Sri Lanka to completely lift vehicle import ban by 2025
According to the Colombo Gazette website, a local Sri Lankan media, the International Monetary Fund (IMF) said that the Sri Lankan government has drawn up a preliminary roadmap to completely lift the ban on vehicle imports by 2025. According to this, Sri Lanka will allow the import of public passenger vehicles and special-purpose vehicles from the third quarter of 2024, followed by the import of freight vehicles in the fourth quarter of the same year. It also stated that by 2025, Sri Lanka will completely lift import restrictions on all motor vehicles.
It is reported that the Sri Lankan government implemented a vehicle import ban from 2021 to 2022 due to the impact of the COVID-19 pandemic, and then continued to maintain this decision due to the country's economic crisis. In August 2022, the Sri Lankan government imposed an import ban on 1,465 items due to the economic crisis, and then lifted the import restrictions on most of them.
Russia updates the list of products that require mandatory labeling
On July 10, 2024, TASS reported that the Russian government has updated the list of goods that require mandatory marking and the relevant documents have been published.
The list divides goods into two categories: food and non-food, and adds seven new categories of goods that must be mandatorily marked from September 1, 2024. The newly added categories of goods includeNon-alcoholic beer, canned food, edible vegetable oils and fat products, some rehabilitation aids (crutches, canes, handrails, wheelchairs with sanitary equipment, etc.), bicycles and bicycle frames, bicycles and tricycles with auxiliary power, pet food and veterinary medicines。
In addition, new food additives, medical gloves and preservatives will also be included in the scope of mandatory labeling from March 1, 2025. The circulation of commodities affected by the list will be tracked through the National Commodity Circulation Monitoring Information System.
For more details, see:
https://tass.ru/ekonomika/21325613
Nigeria suspends import taxes on some food to regulate food prices
The Nigerian government is planning to suspend import taxes on food grains such as wheat and corn for 150 days and set recommended retail prices to curb rising food prices in the country. This move is part of the government's policy to control food inflation in the country. Currently, the country's food inflation rate has reached 40.66%.
According to China News Service, Nigerian Minister of Agriculture and Food Security Abubakar Kyari said that the government has taken a series of measures and will implement them in the next 180 days. While suspending import taxes on some food, the government will also import 250,000 tons of wheat and 250,000 tons of corn. These commodities will be imported in a semi-processed state and supplied to small-scale processors and millers.
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