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Shipping Freight Rates Are Starting to Fall as Shipping Demand Decrease

Shipping Freight Rates Are Starting to Fall as Shipping Demand Decrease

2022-07-29
Spot rates on major routes from Asia to North America, Europe and the Mediterranean continued to fall.

Freight rates on transpacific routes have fallen by more than 50% from last year's peak.

The container market is expected to "lose momentum" in the third quarter, with "a steeper decline in the fourth quarter as freight and time charter rates decline as supply chain disruptions lift and consumer demand cools," the analysts said.

According to the latest data from the Drewry World Container Index (WCI), the composite freight rate fell 2.6% for the week, marking the 22nd consecutive weekly decline.

Following the announcement at the end of last month to reduce the sea freight by 500 euros, CMA CGM recently issued another announcement, saying that it will reduce the freight and expand the scope of application.

Specific measures include: a reduction of 750 euros per 40-foot container for all goods imported from Asia by all customers in France; a reduction of 750 euros per 40-foot container for all goods destined for French overseas territories; the company said these measures This means that shipping costs have dropped by as much as 25%.

Recently, a number of freight forwarders said that the latest quotations obtained from shipping companies show that the current freight rate of a 40-foot high container on the US-Western route is around US$7,000, which is directly halved compared to the freight rate at the beginning of the year. The freight rate of the 40-foot high container on the US east route is around 11,000 US dollars, down nearly 40% compared with the beginning of the year. The freight rate of 40-foot high container on the European basic port route is about 9,800 US dollars, which is about 20% lower than that in April and May.

Spot freight rates have been on a downward downward spiral since the start of the year, so there is no reason to see this trend reversed. "Despite the peak season for the container market, it now appears that the downward pressure from the pandemic and the continued rise in global inflation levels have taken a heavy toll on demand for cargo space.

The report said the decline in freight rates on major trade routes "has prompted liner companies to develop air travel plans to cut effective capacity and keep freight rates up". "Continued supply chain bottlenecks" have "disrupted normal shipping schedules and container liquidity".
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