Insiders of the international shipping industry have predicted a further decline in shipping prices following the recovery of the global logistics supply chain from the pandemic and slow demand due to inflation in Europe and the U.S.
The year of 2021 was a landmark period of time for the shipping industry, when the shipping price of each TEU on some of the most popular routes climbed to 20,000 U.S. dollars.
With the gradual recovery of the global logistics supply chain in 2022, the sky-high shipping prices have started to drop, with the freight rates of popular routes down by 30 to 40 percent year on year.
According to the Baltic Exchange's FBX index, the average price of shipping FBX containers was 6,583 U.S. dollars on June 29, down 40.9 percent from the record high in September last year.
In the figure, the shipping prices of the China/Far East-North America West Coast route and the China/Far East-North America East Coast route dropped by 63.1 percent and 54.6 percent respectively from their high last year, while the price of the China/Far East-north Europe route decreased 29.4 percent compared with its historical high in January this year and 26.6 from the highest price of last year.
"Now, the global shipping market has dropped from the peak last year to the current average of about 7,000 U.S. dollars per container, which is basically same as the level in the same period of last year. Let's take the North America route as an example. During the price peak last year, the shipping fee for a container was about 20,000 U.S. dollars, while now it has dropped to around 7,000 U.S. dollars. In the case of the European route, the shipping fee per container was more than 15,000 U.S. dollars, down to the current 8,000 U.S. dollars," said Zhang Peipei, general director of Shenzhen DIDADI Logistics Technology.
Industry insiders said that the decline in shipping prices this year lies in the huge increase last year, which was an unsustainable state. In addition, with the improvement of the pandemic, the global logistics supply chain has recovered smoothly. For example, the shipment on the China/Far East-north Europe route took about 60 days last year, but now it takes only 30 days.
"Many factors gathered last year, including the pandemic, the rapidly increasing demands in Europe and the U.S. and their replenishment of inventory, and the sudden congestion at ports. After these cases appeared, I think the supply chains were taking some measures to resolve these problems. In this way, it is very understandable that the shipping price has dropped," said Wu Sanqiang, secretary of the board of directors of China International Marine Containers (Group) Ltd. (CIMC).
The consensus forecast is that prices could still fall in the second half of this year as slowing demand from inflation in Europe and the U.S. affects global shipping.
"I just looked through the data of the North America freight market, showing a decrease of eight percent. Through this data, we can obviously predict that the shipping price in the second half of this year will not grow as crazy as last year. It may tend to be in a very stable state, or may be in a state of decline all the way," said Zhang.
"If the impact of high inflation in Europe and the U.S. and the Fed’s interest rate hike cannot be well controlled, it will easily lead to a rapid slowdown of the European and U.S. economies. In this case, there might be a decrease in the demands of the European and U.S. markets, following which the tension of the shipping market could fade faster," said Wu.
Source: CCTV
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