Freightos sees ocean freight rates falling

Rates from Asia to the U.S. East Coast have fallen since the fourth quarter of 2018, and there are “several signs of slowing world trade.”

Freightos sees ocean freight rates falling

Rates from Asia to the U.S. East Coast have fallen since the fourth quarter of 2018, and there are “several signs of slowing world trade.”

Freightos sees ocean freight rates falling

Rates from Asia to the U.S. East Coast have fallen since the fourth quarter of 2018, and there are “several signs of slowing world trade.”

 

   Ocean freight rates have fallen in recent weeks, following a pattern that is often seen around this time of year following the Lunar New Year celebrations in Asia.
    But the situation is unusual this year because freight rates in the fourth quarter of 2018 were so high and so much capacity was added to satisfy demand from shippers rushing to get goods into the U.S. before threatened tariff increases.
    Philip von Mecklenburg-Blumenthal, a vice president at Freightos, said in the Asia-U.S. trade, the supply of container capacity “still outstrips the growth in demand.”
    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.

   The global Freightos-Baltic Index, which can be viewed on the Freightos website, stood at $1,357 on March 15, down 5 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.
   “Peak season started earlier, was stronger and lasted longer in 2018 than the previous two years,” von Mecklenburg-Blumenthal explained. In addition, “we have quite an oversupply of vessels in the U.S. market coming from Asia because of the tariff situation.”
    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.
    Advance shipping in the fourth quarter to beat the planned trade tariff increase from 10 percent to 25 percent pushed some of what would have been first-quarter 2019 demand back into the fourth quarter of last year, said von Mecklenburg-Blumenthal.
    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.

Our goal as always is to be sure that river is not the silent ‘R’ in transportation and that policymakers don’t just focus on roads, rail and runways.

Six fully cellular container shipping services are offered from the India Subcontinent to North America (U.S. and Canada) and a total of seven container shipping companies deploy capacity on the trade, according to BlueWater Reporting's database.

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Freightos sees ocean freight rates falling

Rates from Asia to the U.S. East Coast have fallen since the fourth quarter of 2018, and there are “several signs of slowing world trade.”

Mar 15, 2019 on Dec 27, 2018AmericanShipper.com

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Freightos sees ocean freight rates falling

Rates from Asia to the U.S. East Coast have fallen since the fourth quarter of 2018, and there are “several signs of slowing world trade.”

Mar 15, 2019 on Dec 27, 2018AmericanShipper.com