The container shipping market, which has been declining since last year, seems to have shown a significant improvement since March this year. In the past three weeks, container freight rates have continued to rise, and the Shanghai Export Container Freight Index (SCFI) has returned to the 1000 point mark after 10 weeks, marking a greater weekly increase in two years.
According to the latest data released by the Shanghai Airlines Exchange, the SCFI index continued to rise from 76.72 points to 1033.65 points last week, reaching a higher level since mid January. The Eastern and Western US routes continued to rebound significantly this week, but the freight rates on the European route shifted from rising to falling. At the same time, market news shows that some routes such as the US Canada Line and Latin America Line have experienced severe cabin explosions, and shipping companies may raise their freight rates again starting from May.
Industry insiders point out that although the market performance in the second quarter has shown signs of improvement compared to the first quarter, there has not been a significant improvement in actual demand, and some of the reasons are due to the early shipment wave brought about by China's upcoming May Day holiday, including the recent news of workers slacking off at the West Coast port. Although it does not affect port operations, it has also led to some shippers actively shipping. The rebound in US freight rates in this round and the adjustment of freight capacity by shipping companies may also be seen as the shipping companies fully negotiating to stabilize the new year long contract price that takes effect in May.
It is understood that March to April is the time point for the long-term negotiation of US container freight rates in the new year. However, this year, in the context of sluggish spot freight rates, there have been significant differences in negotiations between shippers and shipping companies. Shipping companies have tightened their supply and promoted spot freight rates, which has become a measure they insist on not lowering prices. On April 15th, shipping companies gradually confirmed the price increase on the US route, with a price increase of around $600 per FEU, which has occurred this year. This rise is mainly driven by seasonal shipments and urgent market orders, and it remains to be seen whether it represents a rebound in freight rates.
In the latest Global Trade Outlook and Statistical Report released by the World Trade Organization on April 5th, it was pointed out that due to uncertain factors such as the instability of the world situation, high inflation and tight monetary policies, and financial markets, it is expected that the growth rate of global commodity trade this year will still be lower than the average level of 2.6% in the past 12 years.
The WTO predicts that as global GDP rebounds next year, the growth rate of global trade volume will rebound to 3.2% under optimistic conditions, higher than the past average level. And the WTO is optimistic that the relaxation of China's epidemic prevention policies will release consumer demand, promote trade activities, and thereby increase global commodity trade volume.
Source: Souhang Network
