The rate of decline of average spot rates had slowed in recent weeks giving some hope to container lines that they had stemmed the downwards tide, however, the latest indices from the Shanghai Containerized Freight Index (SCFI) and Drewry showed an acceleration again over the last seven days.
The SCFI, published on Friday, was down 8.6% on the previous week 1,443.29 points. Back in January hit record highs breaching the 5,000 points barrier.
The picture was similar for Drewry’s composite World Container Index (WCI) which decreased by 9% to $2,773.49 per feu. The index is 70% lower than the same time a year ago and 73% below the peak last September of $10,377.
The WCI now sits at 26% below the five-year average $3,759 per feu, which Drewry said indicates a return to normal pricing. It does though remain 115% higher than pre-pandemic levels of $1,420 in 2019.
The Asia – Europe led the fall in spot rates with Shanghai – Rotterdam and Shanghai – Genoa both down 15% last week $3,126 and $3,494 per feu respectively. The decrease was less marked on the transpacific where the Shanghai – Los Angeles where rates fell 4 % to $2,262 per feu.
Looking ahead the analyst is expecting more of the same and said: “Drewry expects smaller week-on-week reductions in rates in the next few weeks.”
Listen to a recent podcast episode covering the outlook for the container, tanker and dry bulk sectors
While shipping lines continue to report stellar Q3 profits on the back of long-term contract rates the continued plunge in spot rates is forcing renegotiations of existing contracts, and placing lines firmly on the back foot in negotiating next year’s contracts. Carriers have been blanking sailings in an effort to stem the rate of spot decline, which appeared to have been having some success until last week.
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