Contrary to the usual seasonality, the freight market in the container segment is currently losing ground rapidly.
Rates in the Far East continued their downward slide this week – the Shanghai Containerized Freight Index fell by 4% to 1,489 points, returning to the same level as in mid-May, before the temporary reduction in US punitive tariffs led to a sharp rise in cargo volumes and freight rates. The biggest losses were on the route from the Far East to the east coast of South America (-18%), followed by the transpacific trade to North America (-10%).
“A paradoxical situation”
The decline in spot rates has also accelerated on the Far East-Europe route. The index level slipped by 4.4% to 1,961 $/TEU. Other indices estimate prices for shipments ex China to Northwest Europe at between 3,000 and 3,300 $/TEU.
However, much lower offers of around 2,500 $/FEU for shipments this month have long been circulating on the market. “It’s a paradoxical situation,” the head of a seaport freight forwarder told HANSA. “The ships are still full, but rates are already falling. There is a lack of confidence in the market.”
Futures traders for sea freight on the Shanghai International Energy Exchange expect a constant downward trend in prices until October. Contracts on Far East-Europe rates maturing at the end of October are trading at a discount of around a third compared to the current spot market. As recently as July, several lines had planned to raise prices by a further 30% and, but these attempts have now clearly failed.
Far East-Europe trade loses ground again
Carriers have obviously overestimated the growth in Europe’s import business. The latest data from Container Trades Statistics in the UK shows that after impressive growth in May, the Far East-Europe trade lost momentum again in June. As a result, container shipments fell by more than 15% compared to the previous month, to 1.5 million TEU.
Global cargo volumes in June fell only marginally compared to May, to 16.01 million TEU. Stability was provided by the still-growing business volume for carriers from Asia to North America.
By contrast, the charter market for ships continues to be dominated by fixed conditions. The ConTex in Hamburg rose slightly this week to 1,536 points, which is +15% above the previous year’s level. This shows that the lines still consider the freight market healthy enough to keep the globally available tonnage fully operational. Minimal increases were recorded by the ConTex panel brokers in the 1,100, 1,800 and 4,250 TEU segments.
Among the active charterers this week was CMA CGM with three deals for feeder vessels in the Mediterranean, including a declared option. The French company extended the charters for the “Atlantic North” (1,121 TEU) and the “Atlantic Monaco” (1,022 TEU) for 12 months each at $16,900/day.
In the larger tonnage segment, Global Feeder Shipping from Dubai was active, securing the Chinese wide-beam freighter “Zhong Gu Lan Zhou” (4,636 TEU) for two years at over USD 46,000/day, according to brokers.
Baltic Dry Index rises slightly
After a weak start to the week, the dry bulk shipping market gradually picked up on the spot market. The Baltic Dry Index ended the week up 48 points at 2,051. The large bulkers benefited from an increase in charter contracts for iron ore ex Western Australia, while the supramaxes experienced a small rally in the US Gulf and in Australia.
There was a spectacular turnaround in the crude oil tanker market, with high rate increases for supertankers after the OPEC states agreed on further significant production increases for September.
According to Clarksons, average spot revenues for VLCCs jumped by more than 50% to over $43,000/day. Suezmaxes and Aframaxes also increased significantly.
