According to a recent report by Container xChange, global container rates are experiencing a significant decline, with contract rates moving closer to spot rates.
This trend is reportedly evident in regions such as China and Southeast Asia where shipping demand remains weak due to global inflation and restricted demand – thus leading to a significant drop in freight prices.
“The long-term outlook for the shipping industry remains uncertain, as the low consumer demand in North Europe and the slow market pickup in China suggest that the shipping industry will continue to struggle,” the report stated.
“Container prices in major ports across Asia, such as Ningbo, Shanghai, and Singapore, have fallen sharply in the past year, indicating that the current situation may persist in the foreseeable future.”
After comparing the prices of a 20ft container in the top three ports of Asia – Ningbo, Shanghai, and Singapore – to their prices in January 2022, Container xChange observed a significant decline in all three ports.
The average price in Ningbo decreased from €2,326.25 to €1,219.79 (approx. $2,460 to $1,290 USD), while in Shanghai it fell from €2,240.82 to €1,200.70 (approx. $2,370 to $1,270 USD), and in Singapore it went down from €2,278.62 to €1,172.40 (approx $2,410 to $1,240 USD).
In Southeast Asia, container prices saw a 32 per cent year-on-year (YOY) drop from €3,590.80 in January 2022 to €2,448.50 in January 2023 (approx. $3,798 to $2,590 USD).
Asia-US West Coast rates in January 2023 were 11 per cent lower than in January 2020, and Asia US-East Coast rates were 84 per cent lower than in January 2022.
Container xChange CEO & Co-Founder, Christian Roeloffs, said container trends are a crucial barometer of economic progress and global trade, and the current market outlook appears bleak.
“Container prices and leasing rates are plummeting, with the global shipping industry witnessing a freefall in container rates,” he said.
“The blank sailings have not been able to control the sliding prices, and the mid-term outlook for the industry indicates a slowdown in container trade on Asia to EU and Asia to America trade lane.
“However, contract rates are closer to spot rates, indicating the lack of demand for long-term commitments, which can be attributed to market uncertainty.”
According to Roeloffs, Intra-Asia trade is showing some resilience, with comparatively better demand for containers.
“Nonetheless, the mid-term outlook does not project demand to rise to the heightened levels witnessed in 2020 and 2021, except for a possible inventory replenishment cycle that may bring about some demand for containers,” he said.
“The falling rates and increased availability of containers in certain regions of the world are indicative of weak demand and slower economic growth.”
Container xChange predicts that export growth and outbound container volumes will remain low in the first quarter of 2023.
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