Sea freight has dropped sharply, with the highest price cut by nearly half! Is it dawn or "flop"?

In recent weeks, there has been a sharp correction in the sea freight from China to the west of the United States, which has attracted market attention. The correction of shipping prices has seen the dawn for many small and medium-sized foreign trade enterprises suffering from the sharp rise of freight rates.

According to reports, an executive of a forwarder company in Shanghai said that in the past four days, the freight of a 40 feet standard container from China to the west coast of the United States has decreased from about US $15000 to slightly more than US $8000, a decrease of nearly half, while the freight to the east coast has decreased from more than US $20000 to less than US $15000, a decrease of more than a quarter.

The agent sold off the shipping space, resulting in the decline of freight rate

Some analysts said that the shipping costs between China and the United States fell sharply due to the approaching off-season and the decline of China's manufacturing capacity, and "speculators" were eager to sell the hoarded shipping space spot.

Sea freight before the outbreak is usually $1500-2000. Affected by home restrictions, American consumers buy durable goods including fitness equipment and furniture on a large scale. At the same time, there is a shortage of global container supply and serious congestion in various ports, leading to a surge in sea freight and speculation by scalpers.

With the intensification of the supply chain crisis, leading global shipping companies such as CMA CGM, Maersk, Hapag-Lloyd, and Ocean Network have announced the suspension of the increase in spot freight rates, but they did not express their intention to reduce prices.  

According to previous reports from China Economic Weekly, from the inflow of containers into the market, middlemen continue to change hands to push up container prices. When a container reaches the enterprise terminal, there must be at least three or four middlemen raising the price.

"Red Star News" pointed out that, in addition, with the implementation of production restrictions, the production capacity of enterprises has declined, and transportation demand has fallen. Freight forwarders have dumped their hoarded containers one after another, leading to a drop in freight rates.  

According to the Baltic Shipping Price Index (FBX) (including surcharges), the spot freight rate from Asia to West America fell to US$13,025/FEU last Friday. Although it was still 3.4 times the spot freight rate last year, it was different from the FBX on September 15. The historical high of US$20,586/FEU is down 37%.  

Last Friday, the Asia-US East Coast freight rate shown by the FBX index was $19,392/FEU, a 13% drop from the record high of $22,289/FEU set on September 15.  

From September 14th to October 8th, the daily assessment in US dollars per FEU Blue Line = Asia-West America Green Line = Asia-East America:  

Drewry’s assessment data last Thursday showed that freight rates had also fell, but it was much slower than the fell of the FBX index.  

The Shanghai-Los Angeles rate was US$11,173/FEU, which was 10% lower than the peak on September 23.  

The Shanghai-New York rate was $15,110/FEU, which was 6% lower than the September 16 high.  

Weekly evaluation in units of USD per FEU. Blue Line = Shanghai-New York Green Line = Asia-West America:  

Spot shipping is different from long-term shipping. An analyst at Tianfeng Securities said that long-term freight rates are often set by shipping companies, but spot freight rates are actual market prices determined by supply and demand.  

Many of the long-term rates listed by the Shanghai Shipping Exchange for shipping a 40-feet container from China to the United States are less than US$5,000, which is much lower than the spot price.  

Expert: the consolidation market is too early to enter the adjustment period

China’s Golden Week holiday provides a rare moment of relaxation for freight companies serving trans-Pacific routes, but it is too early to judge whether freight rates have entered the adjustment period.  

As Chinese manufacturers have reduced production, weaker market demand has led to a decline in freight rates on some routes. However, Shifl said that the reduction in Chinese factory output means that manufacturing orders from the United States and the European Union cannot be completed on time, orders will be backlogged, inventory shortages and price increases will become more pronounced.  

And congestion still exists, and recently there have been signs of spreading from North America to Europe. On the west coast of the United States, the decline in Chinese exports eased the congestion in the Ports of Long Beach and Los Angeles, but the ship's waiting time was still as long as two weeks.

In addition, the latest report of the National Retail Federation (NRF) showed that the volume of imported containers in the United States in October may still remain close to record levels.