The epidemic in the peak period has pushed the price of sea container freight to a record level, which is currently falling rapidly.
Seaports in many parts of the world have been congested for two years and the recent severe shortage of containers has gradually been alleviated as China’s import and export activities decelerate amid weak market demand. Western economy along with weakening global economic conditions, according to data from CNBC.
“Retailers and large buyers, and also carriers, are becoming more cautious about the outlook for demand,” said Christian Roeloffs, CEO of logistics platform Container xChange. So they order less.”
“In other words, congestion is easing, reflected in reduced waiting times for ships, ports operating at less capacity, and longer turnaround times for containers. The result is a relief in the market.”
According to the Drewry World Container Index – a reference measure of global container freight rates, the current price for a 40-foot container is $3,689. This price has decreased by 64% compared to September 2021 and has decreased continuously for the past 32 weeks. The current price is much lower than the price of over $ 100,000 / container at the peak of the pandemic, but overall it is still 160% higher than the price of $ 1,420 / container before the pandemic.
The shortage of containers gradually decreased but still could not make it up for the damage (Cre: SEC Warehouse)
The decline in ocean freight rates coincided with the decline in container shipping activities recorded by Nomura Bank. According to Drewry, fares on major routes such as ShangHai-Rotterdam and ShangHai-New York have dropped by up to 13 percent.
“We think the sharp drop in container shipping activity is primarily a reflection of U.S. retailers’ reductions in orders and reduced inventories as a result of the decline in shipments,” Nomura analyst Masaharu Hirokane said in a note. economic recession”. However, there is no sign of a sharp decline in the US retail market yet.
After Shanghai reopened after a prolonged anti-Covid blockade, the volume of goods through the port, although increased, was not enough to make up for the previous decline. In Europe, container freight rates are also going down along with consumer confidence, according to Container xChange. Trends in logistics and supply chains over the past two years have now been reversed, with container availability continuing as a result of blockade-affected congestion and unexpected spikes in demand.
Container demand and reduced freight rates make container factories take a long break (Cre: Saigon Times)
Arcon Containers CEO, Mr. Supal Shah, said that container factories in China have also suspended production and expect this situation to remain for a long time. “We heard it was four months,” he told Digital Container Summit. “Container capacity has been pushed in China, Europe, India, Singapore, and most other regions of the world.”
Reported by Lucy 2022-11-16
