Carriers failed to check the decline in freight rates with the SCFI slipping by 5.6% last week, led by sharp drops on the Transpacific and Middle East routes. The SCFIS, which is a better measure of actual market spot rates, have been dropping continuously since its July peak to the US West Coast in contrast to the SCFI false signal of a rate rebound a week ago, with cumulative losses reaching 38% since July.
The outlook over the coming 4 weeks is mixed, with carriers hoping that the diversion of cargo away from the US East Coast ahead of the potential port labour disruptions in October could provide a boost to the market. The short lived Canadian rail strike at the end of last week did not result in any material increase in port congestion although US PNW ports are struggling to cope with increased inbound rail volumes while the PSW ports remain largely free of congestion. Freight futures continue to weaken, with North Europe rates trading at a discount of over 70% to current spot rates.
Linerlytica
Shanghai freight futures predict further rate declines
Container freight rates are poised to fall by over 70% by June next year, based on the latest CoFIF EC contracts traded on the Shanghai International Energy Exchange (INE). Although the drop is not as severe as the freight rate collapse seen at the end of 2022, current freight futures prices anticipate continuous declines over the coming 12 months, with no rebound expected at the end of this year and no repeat of this year’s post Chinese New Year rate rally in 2025. Carriers have failed to check the rate decline so far, with the SCFIS dropping by 12% to North Europe from its peak in July with last week’s 7.3% decline overshadowing the relatively mild 1% to 3% week over week declines seen over the previous 4 weeks.
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