The terminal demand in the container shipping market continues to be sluggish, and the momentum of cargo pulling before the National Day holiday has not yet appeared, and freight rates continue to decline.
According to the latest data released by the Shanghai Airlines Exchange on September 15th, the Shanghai Export Container Freight Index (SCFI) index fell 50.57 points to 948.68 points last week, a weekly decline of 5.06%, and has been below 1000 points for two consecutive weeks. The three major long-distance routes continued to decline, with the US West Line falling 7% to below $2000, and the US East Line plummeting 11%, indicating that the pressure of oversupply has not eased after the small peak season of pulling goods required for the fourth quarter festival.
Among them, the freight rate per FEU for the Far East to the Western United States decreased by $149 to 1888 yuan, a weekly decrease of 7.3%; The freight rate per FEU on the Far East to the US East Line decreased by $319 to $2550, a weekly decrease of 11%. The freight rate per TEU for the Far East to Europe line decreased by $56 to $658, a decrease of 7.8%; The freight rate per TEU for the Far East to Mediterranean Line decreased by $60 to $1248, a weekly decrease of 4.59%.
On the offshore line, freight rates fluctuate. The freight rate per TEU from the Far East to Kansai, Japan decreased by $4 compared to the previous week; The freight rate per TEU from Far East to Kanto, Japan has increased by $2 compared to the previous week; The freight rate per TEU from the Far East to Southeast Asia has increased by $20 compared to the previous week; The freight rate per TEU from the Far East to South Korea remains unchanged compared to the previous week.
Industry insiders point out that it is still half a month before China's National Day holiday, and we have not seen the momentum of buying goods before the holiday. Terminal demand is still not high, and the continuous decline in freight rates reflects the pressure of oversupply. Despite significant reductions in class and cabin sizes, the market freight rates have been declining for two consecutive weeks. As the fourth quarter enters the off-season, the market situation will worsen. It is expected that the US West Line freight rates will fall below $1200/FEU in the fourth quarter, while the US West Line cost prices are between $1300 and $1500. In addition, the freight companies will also face losses from class reductions.
On the other hand, due to the deployment of large container ships on the European route, the freight rates on the European route were already low. Some consolidation companies have already charged symbolic shipping fees of only $25 for the return journey, relying on additional fees such as container operation fees to compensate for terminal expenses, with the aim of transporting containers back to Asia.
In addition, Singapore's marine fuel has continued to rise from $640 per ton on May 3 this year to the latest $964 per ton, a cumulative increase of 51%. The financial reports of shipping companies in the third and fourth quarters are expected to be impacted.
Looking ahead, due to the upcoming US presidential election in November next year, the industry estimates that the US China trade war will not ease before the election, making it difficult for trade to improve. Vietnam, considered the biggest winner under the US China trade war, saw its exports decline for six consecutive months in August, marking its longest decline since 2009, indicating that both US inflation and destocking issues have not yet been resolved.
Regarding whether the market situation will improve in the second quarter of next year, industry insiders have expressed the need to look at it quarter by quarter. From the perspective of customer orders and market forecasts, the inventory of importers has now decreased from around 50% to 20%, with limited growth in freight volume. In addition, the transportation company's capacity growth will be significant next year, which will affect the market situation next year.