Comprehensive current major shipping indices, including Drewry’s World Container Index (WCI), Freightos Baltic Sea Price Index (FBX), Shanghai Shipping Exchange’s SCFI Index, Ningbo Shipping Exchange’s NCFI Index and Xeneta’s XSI Index all show, Due to the lower-than-expected transportation demand, the overall freight rates of major routes such as the US, Europe and the Mediterranean continued to decline. Recently, the spot freight rate has been lower than the long-term agreement price. The survey shows that if the market conditions continue to change, more than 70% of customers will Start thinking about renegotiating contracts, or even breaking them.

The latest issue of Drewry’s Composite World Container Index (WCI) plunged 3% this week to $7,285.89/FEU. A 10% decrease from the same period in 2021. Shipping rates from Shanghai to Los Angeles plummeted by 5% or $426 to $7,952/FEU. The Shanghai-Genoa and Shanghai-New York spot prices also fell by 3% to $11,129/FEU and $10,403/FEU, respectively. Meanwhile, freight rates from Shanghai to Rotterdam fell 2% or $186 to $9,598/FEU. Drewry expects the index to continue to decline slowly over the next few weeks.

Data from the Xeneta platform shows that the current spot freight rate on the trans-Pacific route to the United States and West is US$7,768/FEU, which is 2.7% lower than the long-term contract price. Unbelievable.

At present, the gap between the spot and contract freight rates on the trans-Pacific route to the US West has narrowed rapidly, which has surprised many shippers. Now it has come to a critical moment. The freight rate of some containers on the US West Line has been less than US$7,000/FEU. The spot freight rate continues to weaken and has now fallen below the long-term agreement price, showing an upside-down phenomenon. The spot freight rate on the European line is stuck at US$10,000 and is also at risk, causing many shippers to pay attention to the contract details.

According to industry insiders, the freight rates of American routes are divided into different types. Many direct passengers have signed long-term agreements with shipping companies. The prices range from the cheapest US$6,000 to US$7,000 (to the US West Base Port) to the most expensive US$9,000. Yes, because the current spot price in the market is already lower than the long-term agreement price, the shipping company may lower the price depending on the situation. Now the cheapest spot freight rate in the US West has fallen below US$7,000, and the freight rate in the US East is still above US$9,000.

The report of the Ningbo Containerized Freight Index (NCFI) reflects the industry’s pessimism about trade. NCFI said that demand for transportation on North American routes has not improved, with a clear excess of space leading to increasing price declines. In addition, due to the limited demand for freight on the European route, the loading rate has not performed well recently. Under pressure, some liner companies have taken the initiative to reduce the freight rate to strengthen the collection of goods, and the spot market booking price has fallen.

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