16 September 2022

Container spot freight rates are currently on the decline, with Freightos Baltic Index (FBX) reporting that “Asia-US west coast rates have fallen by nearly 75% since the start of the year and are at their lowest level since May of 2020”, adding that  “the significant shift of volumes – and congestion – to the east coast has kept Asia-US east coast prices from falling as dramatically, with rates “only” half their level at the start of the year and [at the same level] with prices in May 2021.”

Analysts see similar developments on Asia-European trades, and point to reductions in demand as the main cause underpinning the decline in rates. According to Peter Sand, chief analyst at Xeneta, July volumes between Asia-North Europe have declined 4% on a year-to-year basis, with the prospects of demand picking up again being dim.

In this context of reduced demand, some analysts expect capacity cuts and an increased idling of ships in order for carriers to avoid a further drop in freight rates. Head of ocean freight at DHL Global Forwarding, for example, noted that a 40% increase in blank sailings had been announced for October, pointing to the problems this could cause for European exporters, for example, regarding a shortage of empty containers.

Source: the Loadstar