Falling Demand, Falling Freight Rates, Is This A Long-term Trend?

European route: The market demand for transportation is sluggish, and the freight rate maintains a downward trend. The freight index of European routes was 4803.4 points, down 1.5% compared with last week; the freight index of east route was 4190.8 points, down 1.1% compared with last week; the freight index of western route was 5145.1 points, down 2.7% compared with last week.

North American routes: The supply and demand fundamentals of the routes are relatively good, and some liner companies have increased the freight rates of the routes. The freight index of the US east route was 3692.6 points, up 1.4% compared with last week; the freight index of the US west route was 5072.5 points, up 1.2% compared with last week.

Middle East route: The supply of shipping space on the route obviously exceeded the demand, and the spot freight rate in the market continued to decline. The Middle East route index was 2556.4 points, down 6.6% from last week.

Containerized spot rates on most Chinese export routes fell last week, is this a long-term trend?

In this case, the shipping company stopped more voyages. So here comes the question? With fewer voyages, how will this be reflected in future freight rates?

Ocean freight rates have fallen by more than 8% since the start of the year due to rising costs and inflation due to the war, as well as increased shipping capacity due to shipping companies boycotting Russian cargo.

The Ningbo Containerized Freight Index fell on the 16 routes covered by its composite index, with demand "sluggish" in the Nordic and Mediterranean markets leading to "pressure on freight rates".

The Shanghai Export Container Freight Index shows that the Shanghai Export Containerized Comprehensive Freight Index has fallen for four consecutive weeks. Compared with the beginning of February this year, the decline reached 7%.

In the past month, the freight rate of Shanghai Port's exports to the European base port market has dropped by more than 8%; the freight rate of Shanghai Port's exports to the Mediterranean base port market has dropped by nearly 5%.

"Amid soaring fuel costs and ongoing supply chain disruptions, it seems odd that freight rates are falling, even if they do remain very high," an industry source said.

According to reports, forward bookings in northern Europe have fallen sharply. Despite this, shipping companies are preparing to cancel more sailings to cope with the period of low demand. 2M operators Maersk and MSC recently announced that three sailings were cancelled in April, which MSC will return to due to "continued challenging market conditions".

Port of Los Angeles staff acknowledged at a news conference that there could be another surge in freight in the future as the outbreak improves. About one-third of Los Angeles' imports come from areas affected by the outbreak. After the outbreak improves, "depending on the extent of the current disruption, it may be enough to drive up transpacific freight rates again".

Peter Stallion, head of aviation and containers at FIS, said there was a bearish view that "demand will be destroyed as demand for Russian cargo collapses". "At the same time, consumers may be showing caution because they'll be paying more on their energy bills than the big engine of retail that's driving soaring freight rates in late 2020, early 2021," Stallion said.

Weekly average capacity between Asia and Europe is about 9% higher than a year ago at nearly 450,000 TEUs, with most of the extra space coming from Ocean Alliance, the alliance's CMA CGM and The growth was driven by several 23,000-24,000 TEU ultra-large container ships deployed by Evergreen.

Meanwhile, in the pan-Pacific region, there is no sign that rates will change from current rates, even though capacity between Asia and North America has risen sharply by 28% over the past year to 673,000 teu per week (according to Alphaliner data). The highs fell sharply immediately.

In fact, the trans-Pacific route declined for the first time after a 4-week streak of small gains: The FBX index from Asia to the U.S. West Coast had edged up to $16,353 per 40 feet for 4 weeks after a plateau in February until the latest Monday The freight rate fell 2% to $16,024 per 40 feet in the future; while the freight rate on the US East Coast saw its first 6% decline to $17,359/FEU last week after rising to $18,432 per 40 feet for the fifth consecutive week.

Judah Levine, head of research at Freightos, said: “The sharp climb on the East Coast likely reflects the increased focus on these destination ports by carriers and shippers. Empty container numbers have also fallen, but continued delays have led many shippers to look for alternatives. "As a result, congestion at East Coast ports such as Charleston has increased, and the latest forecasts show that freight volumes will continue to rise in the months ahead," he added.