2021 was the most bullish year for shipping in 50 years, with many shipping companies making as much money in one year as they had in the previous decade.
By the middle of 2022, sky-high freight rates have finally eased, approaching year-ago levels.
On June 24, Shanghai HNA Stock Exchange announced the latest week Shanghai export container freight index (SCFI) has shown signs of high decline.
But whatever the pullback, the index is still at an all-time high of 4,216.13 — below 1,000 for most of the decade since its release before the pandemic.
On June 24, the freight rates (sea freight and surcharge) of Shanghai port exported to the basic port markets of western and eastern United States were 7378 USD /FEU and 9804 USD /FEU, down 1.5% and 2.7% respectively compared with the previous period. For the first time since July 30, 2021, the rate per 40-foot container on the U.S.-East Line fell below the $10,000 mark.
For the European route, the freight rate (sea freight and surcharge) of exports from Shanghai port to the European basic port market was 5766 USD /TEU, down 0.5% from the previous period. The freight rate of Shanghai’s exports to the Mediterranean basic port market (sea freight and surcharge) was 6425 USD /TEU, down 1.0% from the previous period.
“The freight rate from China to the western United States dropped from about 13,000 dollars before the Spring Festival to about 8,000 or 9,000 dollars in late March,” said a shipper who shipped to the United States. Due to the high price of sea freight last year, people’s affordability of the price is relatively poor, so they are not in such a hurry to ship the goods, and the shipment volume has also decreased significantly. In June, it was about $8,000, and there’s room to go lower.”
Import containers at the 10 largest U.S. ports have fallen an average of 25 percent since May, according to the data, and the number of ships waiting to unload at the ports of Los Angeles and Long Beach recently dropped to 22 from 109 in January, according to the Southern California Maritime Exchange.
The latest data on the Baltic Index shows that shipping costs per container from China to the West recently were $9,585, down 34% from the start of the year and 50% from the same period last year, but still four times higher than in June 2020.
But there is one big hole in the pipeline: the current contract covering workers’ rights at 29 ports in California, Oregon and Washington expires on July 1 and is being negotiated in San Francisco between the International Longshore and Warehouse Union (ILWU), representing workers, and the Pacific Maritime Association (PMA), representing management. One word and the labor might go on strike.
Professionals point out that the market is in a very delicate time, both sides are waiting, the shipping company is waiting for the cargo volume up, the shippers are waiting for the freight rate to continue to fall, now the shippers hand signed the contract price is very high, he will consider whether to break the contract, but worried that once broken the contract, after the peak season from the shipping company can not get shipping space. If the market is not fully up by the middle of July, the two sides will have to make a decision, and the shipping company may make capacity adjustments to adapt to the new market changes.
The prevailing view in the shipping industry is that the pandemic presents a special opportunity for shipping. Over the past two years, congestion in the supply chain has resulted in significantly longer transport times, which is not only related to maritime delays, but also inland congestion and delays. The bigger the problem in the supply chain, the greater the demand for shipping. Some in the shipping industry have described the phenomenon as a “structural boom” for the industry, leading to speculation that once the temporary problems caused by the pandemic end, some demand will naturally “disappear” and the industry may face overcapacity challenges.
So now,if you need the steel material, just come contact Huien Metal Company. For that the steel material is cheaper and the sea freight also at the bottom price.Catch this time, then you will win.
