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Containerized Shipping Spot Freight Rates are Still Falling

Container owners face the opposite emotional scenario. A shipper who is used to paying $1,500 per 40-foot equivalent and suddenly sees shipping jump to $7,500?

A guy who pays $1,500 per FEU for years only to be slammed by a super-low rate of $20,000 per FEU (including premiums), and then gets “released” when the rate slides all the way down to $7,500?

No one believes the spot price of $20,000 per feu in fall 2021 is sustainable. If interest rates remain so high for too long, it will destroy transport demand and force competition regulators to step in.

As hapago-lloyd CEO Rolf Habben Jansen said on a conference call last November, “If we see more normalization, it’s better for everyone.

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The best-case scenario for shipping lines is that the COVID-19 freight rate spikes allow customers to adjust emotionally and financially to higher freight costs, and allow freight rates to stabilize at levels high enough to generate strong and sustainable profits for ocean carriers, but not high. to the extent that competition authorities interfere.

For shippers, the new normal for this rate will be much higher than pre-COVID-19 levels, but it may look cheap compared to historical peaks.

Drewry’s weekly assessment of the Shanghai to Los Angeles spot price was $7,480 per FEU on Thursday. It was down 23% year-on-year and 1% week-on-week.

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Currently, this valuation is 40% below the peak of $12,424 per FEU at the end of November 2021, but still 5.3x higher than the price at this time in 2019.

Drewry’s Shanghai-New York weekly spot assessment is at $10,164 per FEU, unchanged from last week, down 14% year-over-year, and down 37% from its mid-September peak of $16,183 per FEU, but still four percent below 2019 levels. times.

The downward pressure on spot freight rates continues as there is ample space in the Chinese market, while smaller airlines that lease lower tonnages are cheaper than larger mainstream airlines. Some North Asia to West Coast spot offers were below $7,000 per FEU, the report said.

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