On Friday, the Shanghai Shipping Exchange said its Shanghai Containerized Freight Index (based on 13 routes out of Shanghai to various locations around the world) fell about 3 percent to 742.10 from 766.92 last week. Drewry said on Thursday that its World Container Index, which is assessed on eight major routes (both headhaul and backhaul) between Asia, North America and Europe was down 8.2 percent from the prior week.
Von Mecklenburg-Blumenthal noted that in the trade from Asia to the U.S., “ocean freight prices seasonally fall this time of year.”
In 2018, he said China-West Coast prices dropped 25 percent in the three weeks following the Chinese New Year holiday and in 2017 they dropped 17 percent.
But he said 2019 is unusual because the average freight rate in the first two and a half months is lower than it was fourth quarter of 2018. Usually rates are higher in the first quarter because fourth-quarter rates plunge after the rush to get Christmas merchandise from Asia to the West.
But that fourth-quarter slump did not happen last year.
As a result, Freightos said this week that year-to-date, the average first-quarter freight rate from China/East Asia to the U.S. West Coast is $1,906 per 40-foot container or 84 percent of the $2,275 average in the fourth quarter of 2018.
That’s very different from the pattern seen in the prior two years, when freight rates were slightly higher in the first quarter of 2018 and 2017 when compared to the fourth quarters that preceded them.
The change this year was particularly noticeable in the trade from China/East Asia to the U.S. East Coast, where the rate in the first quarter of this year is $3,095 per FEU or 92 percent of the $3,382 per FEU average in the fourth quarter of 2018.
That’s a big change from from the first quarter of 2018, when the average freight rate was 33 percent higher than in the fourth quarter of 2017. And in the first quarter of 2017, the average freight rate was 24 percent higher than it had been in the first quarter of 2016.
He also said there are “several signs of slowing world trade, including the latest international trade indicator.”
In its ocean freight market update, the forwarder Flexport said general rate increases on the trades from Asia to the U.S. West Coast and U.S. East Coast planned for Friday were canceled, but that another GRI was planned through mid-April. It said space was open on ships but that carriers were planning new blank sailings through mid-April, which would reduce capacity.