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Drewry says container spot prices fell this past week below US$5,000 for the first time since April 2021, signalling that freight rates are returning to sanity
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Oslo-based Xeneta says the recent trend of globally falling spot freight rates has brought shipping costs back on par on the Asia Pacific-US West Coast lane
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The steady slide of spot rates is putting pressure on carriers to renegotiate ocean contracts they had signed with shippers at prices well above levels today
World container spot rates are below US$5,000 for the first time since April 2021, having fallen this past week and sending a strong signal that freight rates are returning to sanity, said Drewry Supply Chain Advisors, which provides consulting services to the global shipping industry.
In its weekly container rates advisory on September 15, Drewry said its latest composite World Container Index decreased by 8% to $4,941.91 per 40-foot container, taking the index to 52% below the peak of $10,377 reached in the same week in September 2021.
“This is a strong signal of a ‘return to sanity’ for freight rates,” said Drewry, which noted that the index is still 34% higher than the 5-year average of $3,692.
Year to date, the average composite index is $7,779 per 40-ft container, which is $4,087 higher than the five-year average, Drewry said.
Xeneta, an Oslo-based container freight and shipping market index platform, said the recent trend of globally falling spot freight rates has brought transport costs back on par on the main transpacific containerized export lanes from Asia Pacific to the US West Coast.
Freightos, a global container rate platform, said in its weekly update that with box spot rates below contract levels, carriers are under pressure to renegotiate ocean contracts they had signed with shippers at prices that are now above-market levels.
“These tensions are nothing new, but improved pricing data is opening up more efficient ways to contract in ocean freight and new methods to manage the risks of volatility in the market,” said Judah Levine, chief shipping analyst at Freightos.
By mid-September 2021, the price spread peaked at $3,800 per FEU but has now fallen back to zero with the box spot rates below US$5,000 currently, their trough since April 2021.
The spread on the Asia-US West Coast trades was minimal up until January 2021, when the average rate from Southeast Asia climbed to $4,360 per FEU and those from China at $4,290. Since then, the spread has increased as rates out of Southeast Asia rose faster and to a higher point than those from China, Xeneta said.
Spot rates on Southeast Asia-US West Coast peaked at just under $12,000 in January, while China-US West Coast rose “only” to $8,700 and peaked in March. Southeast Asia-US West Coast has now shed 62%, and those from China down 49%.
Currently, the average spot rate from the Far East and Southeast Asia is $4,300 per FEU, with China slightly more expensive, Xeneta said.
For the past week, Drewry’s WCI showed spot rates on Shanghai–Los Angeles dropped 11% or $530 to $4,252 per FEU. On Shanghai–Rotterdam, rates fell 10% or $764 to $6,671 per FEU.
Rates on Shanghai-Genoa fell 7% to $7,353 and on Shanghai-New York, 5% to $8,477 per 40ft container. Similarly, rates on Rotterdam-Shanghai eased 2% to $1,059 per 40ft box.
Drewry expects the index to decrease in the next few weeks.
Meanwhile, the Freightos Baltic Index showed Asia-US West Coast prices falling 10% on September 14 to $3,896 per FEU, 80% below the level a year ago. Asia-US East Coast rates eased 2% to $8,553/FEU, 61% below levels in the same week last year.
The steady decline in transpacific spot rates stemmed from weakening demand for ocean freight. At $3,896/FEU, Asia–US West Coast rates have fallen nearly 75% since the start of the year and are at their lowest level since May 2020, the data provider said.
“The significant shift of volumes – and congestion – to the East Coast has kept Asia-US East Coast prices from falling as dramatically, with rates ‘only’ half their level at the start of the year and even with prices in May 2021,” Freightos said.
In response to easing demand and falling rates, carriers are cancelling some transpacific sailings through October. And as spot rates are now well below most contract rates, there are reports that many importers are trying to renegotiate ocean contracts with carriers.
