Global Container Shipping: Contract Rates Inch Closer to Spot Rates
The current situation in the global shipping industry is complex, as container rates are experiencing a significant decline, with contract rates moving closer to spot rates.
This trend is evident in different regions, such as China and Southeast Asia, despite the decline in container rates, the demand for shipping remains weak due to global inflation and restricted demand, leading to a significant drop in freight prices.
The long-term outlook for the shipping industry remains uncertain, as the low consumer demand in North Europe and the slow market pickup in China suggest that the shipping industry will continue to struggle.
Container prices in major ports across Asia, such as Ningbo, Shanghai, and Singapore, have fallen sharply in the past year, indicating that the current situation may persist in the foreseeable future.
Furthermore, the decline in exports to the US and the EU in 2022, coupled with the increase in trade with Russia, may result in a shift in trade routes and patterns.
Although China recorded a trade surplus in 2022, it was largely due to strong export growth in the first quarter of the year, which slowed down as the year progressed.
The slow pace of exports and outbound container volumes is expected to continue into the first quarter of 2023, as forecasted by Container xChange.
Mr Christian Roeloffs, CEO & Co-Founder, of Container xChange said: “Container trends are a crucial barometer of economic progress and global trade, and the current market outlook appears bleak.
"Container prices and leasing rates are plummeting, with the global shipping industry witnessing a freefall in container rates. The blank sailings have not been able to control the sliding prices, and the mid-term outlook for the industry indicates a slowdown in container trade on Asia to EU and Asia to America trade lane.
"However, contract rates are closer to spot rates, indicating the lack of demand for long-term commitments, which can be attributed to market uncertainty.
“Intra-Asia trade is showing some resilience, with comparatively better demand for containers.
"Nonetheless, the mid-term outlook does not project demand to rise to the heightened levels witnessed in 2020 and 2021, except for a possible inventory replenishment cycle that may bring about some demand for containers.
"The falling rates and increased availability of containers in certain regions of the world are indicative of weak demand and slower economic growth.”, he added.
In summary, the global shipping industry is facing a complex situation, with a freefall in container rates, weak demand, and a shift in trade routes. While the shipping industry may witness a rebound in the future, the current outlook remains uncertain.