Source: admin Time: 2023-04-21

Market recovery leads to ship owners filling up their cabins

Freight rates continue to rise, shipping companies are overbooked

 

 

Freight rates in the US West Coast rose 29.1% in a single week

 

According to the latest data released by Shanghai Shipping Exchange on April 14, the Shanghai Export Containerized Freight Index (SCFI) has risen for three consecutive weeks, returning to the 1,000-point mark after a lapse of 10 weeks. Meanwhile, the US East and West routes continued to rebound sharply last week. At the same time, market news shows that some routes such as the US-Canada and Latin American routes are seriously overloaded, and shipping companies may raise freight rates again from May.

 

 

 

According to the latest data released by Shanghai Shipping Exchange on April 14, the SCFI index continued to rise by 76.72 points to 1033.65 points last week, the highest level since mid-January, and the increase further expanded from 3.59% in the previous week to 8.02%. The US East and West routes continued to rebound sharply last week, but the freight rates on the European route turned to decline.

In addition, shippers may face the possibility of an increase in fuel surcharges as shipping lines increase them to mitigate the impact of rising fuel costs.

 

 

 

North America routes:
The overall inflation level in the United States is still high and higher than the Fed's 2% policy target, which makes economic growth face great uncertainty. Last week, transportation demand remained stable. As North American routes entered the contract season, some carriers took measures to control capacity and pushed market freight rates to continue to rise sharply.

 

Freight rates in the US West Coast increased by 29.1%

US East Coast freight rates increased by 19.5%

 

South America routes:

The South American and Mexican routes were seriously overbooked, and some shipping companies were overbooked and dropped containers. Freight rates continued to rise, up 10.3%.

 

Persian Gulf route:

Although the destination countries have entered the traditional holy month of Ramadan, transportation demand continues to perform well, supply and demand fundamentals are solid, and spot booking prices continue to rise, up 11.8%
 

European Mediterranean routes:

As the eurozone's concerns about economic recession and energy markets have eased, inflationary pressure has also eased, and market confidence continues to recover. Transport demand remains stable, supply and demand are balanced, and market freight rates have risen slightly.

 

European freight rates fell slightly by 0.7%

Mediterranean route freight rates fell slightly by 0.2%
 

Australia and New Zealand routes:

The supply and demand fundamentals are relatively weak, and the market freight rates continue to decline. Freight rates fell 4.5% from the previous period.

 

Some of the Latin American and North American routes are seriously overloaded

 

Market news shows that there have been some cabin overflows on the Latin American and US-Canada routes recently due to various reasons.

 

It is understood that the overall capacity of the South American West Line and the Mexico Line is seriously overcrowded, and some shipping companies may be overcrowded and drop containers. It is recommended to book space in advance; although the South American East Line does not have the capacity overcrowding like the South American West Line, the loading rate is also good, and freight rates have continued to rise.
 

In addition, the loading situation at ports across the country on the US-Canada route is relatively good. Some shipping companies on the US West Coast route are facing tight or even overloaded space by the end of April. Some shared-cabin ships on the US East Coast route are also full by the end of April. At the same time, there are problems such as shortage of small containers.
 

Industry insiders pointed out that although actual demand has not rebounded significantly, the market performance in the second quarter showed signs of improvement compared with the first quarter. The reasons are, first, the early shipment before the May Day holiday in China, and second, the rebound in freight rates on the US route and the adjustment of shipping capacity by shipping companies, reduction of flights and control of cabins. In addition, the news of the slowdown of dock workers at the US West Port was reported a few days ago. Although it did not affect the operation of the dock, it also caused some cargo owners to actively ship goods.

 

According to Alphaliner statistics, as of March 27, approximately 5.5% of the global container fleet (1.459 million TEUs) was idle, down from the recent peak of 6.4% (1.68 million TEUs), indicating that ship utilization has rebounded.

 

The market is picking up, and there may be another surge in May

 

The latest Drewry WCI Composite Index is 84% below the peak reached in September 2021. It is 36% below the 10-year average, indicating a return to more normal prices, but is still 20% above the average rate in 2019 (pre-pandemic).

 

 

 

The market generally believes that as the summer peak season approaches, container shipping companies are regaining confidence to promote new capacity. However, at present, demand in Europe and the United States continues to be weak.

 

As macroeconomic data with a high correlation with container shipping rates, the manufacturing PMI data in Europe and the United States in March were not ideal, and both fell to varying degrees. The US ISM manufacturing PMI fell by 2.94%, which was also the lowest point since May 2020; while the eurozone manufacturing PMI fell by 2.47%, indicating that the manufacturing industries in these two regions are still in a state of contraction.

 

Media reports said that on April 15, shipping companies have successively confirmed the successful price increase on the US route, with the increase being around US$600/FEU, which is the first time this year.

 

According to the latest market news, some shipping companies may increase freight rates again on May 1. In addition to the announcement released by Hapag-Lloyd's official website, the GRI for goods transported in 20' and 40' dry containers, refrigerated containers and special containers (including high cabinets) from East Asia to the United States and Canada will be increased by US$800 and US$1,000 respectively. This GRI applies to all Gate In Full containers from May 1, 2023. Other shipping companies also plan to increase freight rates by US$600-1,200.

 

Industry insiders analyzed that this wave of increases was mainly driven by seasonal shipments and urgent orders in the market. Whether it means that freight rates are beginning to rebound remains to be seen. The multi-party game will further intensify before the May Day holiday.

 

 

Source: Foreign Shipping, Shipping Network, International Ship Network, Shanghai Shipping Exchange, etc. and the Internet