Freight prices will accelerate their decline! Industry insiders: Decline is an inevitable trend

Sunny Worldwide LogisticsIt is a logistics company with more than 20 years of transportation experience, specializing in markets such as Europe, the United States, Canada, Australia, and Southeast Asia. It is more of a cargo owner than a cargo owner~

The strike in the East United States officially ended on the 4th of this month. Analysis by industry insiders pointed out that with the arrival of the off-season and the commissioning of a large number of new ships, freight rates are expected to decline at an accelerated pace. The person in charge of a large freight forwarding company agreed with this and believed that freight rates are difficult to maintain and a decline is an inevitable trend.

However, shipping companies may stabilize freight rates through space adjustment, so freight rates may not necessarily fall sharply immediately. We need to wait until after the Golden Week holiday for further observation.

Industry executives also mentioned that due to concerns about possible strikes in the eastern United States, U.S. importers have purchased goods in advance this year, which may lead to an even more deserted off-season in the fourth quarter. Although some of China's cargo exports to the United States are dispersed to Southeast Asia, China still accounts for nearly 60% of Asia's cargo exports to the United States. Therefore, after the National Day holiday will become the main time to observe market changes.

A senior executive of a freight forwarding company further analyzed the shipping company's strategy. He pointed out that shipping companies have become familiar with the space adjustment mechanism in the second half of last year. Even if the market environment is not good, they can use this mechanism to stabilize freight rates or even promote freight rate increases. Since container shipping companies have strong funds and no shortage of cash, there is no need to lose money carrying cargo.

However, there is also another view that due to poor market conditions, freight rates may quickly fall to a certain level in order to allow non-alliance ships with higher operating costs to withdraw from the US line market. However, this price will still remain above the level where alliance ships can make profits. For example, the freight rate on the US-Western Line may be between US,000-2,500 per large box (40-foot container). In addition, for the new alliance layout next year, shipping companies may also reduce prices to gain more customer support.

The latest Drewry Container Freight Index (WCI) showed that comprehensive freight rates fell by 5% in a single week. Even in the face of the strike at the East US ports that started on October 1, the freight rates for the US East Line released on the 3rd still showed a downward trend. With the end of the US East strike on the 4th, the rate of freight rate decline may further accelerate. View article: Freight rates continue to slide, nearly a hundred flights canceled, shipping stocks plummet

At the same time, the European and Mediterranean routes were also affected by the Red Sea crisis, and ships needed to be detoured, causing freight rates to fall by 8% and 9% respectively; the US West Route fell by 4%, and the US East Route fell by 2%. The impact of the end of the strike will be reflected in the freight rates released next Thursday, October 10.

Overall, the container shipping market is facing huge oversupply pressure.

The current backlog of new ship orders will increase the global supply of container ships by 22%, and this pressure will continue to increase. The delivery volume of new ships is also continuing to reach new highs. The container ship shipping capacity delivered throughout 2023 will reach 2.3 million boxes, while 2.14 million boxes have been delivered in the first eight months of 2024.

As of September 7, 2024, the global backlog of new container ship orders has reached 6.84 million boxes, accounting for 22% of the current global container fleet capacity. This is equivalent to the addition of four companies such as Evergreen Marine Corp., the world's seventh largest. Container shipping company capacity.