After the strike in the eastern part of the United States, freight rates continued to adjust, and the latest SCFI index was released, which fell for seven consecutive weeks, narrowing the decline but still facing downward pressure in the off-season. Shipping companies have begun to reduce flights in response to market changes, while considering adjusting pricing strategies, and freight rates are expected to stop falling next week.

Although the dock workers' strike in the east of the United States lasted only three days, its impact continued to ferment. After the end of the strike, the freight rate is still being adjusted. According to the latest container freight index (SCFI) released by the Shanghai Shipping Exchange, the index was reported at 2062.57 points, down 72.51 points or 3.40% from the previous period, which is the seventh consecutive week of decline in the freight index.

During this period, the four major routes all continued to decline, but the decline narrowed. The decline in the US East trade route has contracted particularly significantly, narrowing significantly from the pre-holiday high level to just over 1%. According to industry analysts, this is mainly because the cargo is still being cleared after the strike on the east coast of the United States, and at the same time, shipping companies have reduced flights significantly, thereby alleviating the sharp decline of 9.77% in the first two weeks. However, on the whole, the market has entered the off-season, and freight rates are facing downward pressure, which is easy to fall and difficult to rise.

Specifically, on September 26, the freight rates of the European and Mediterranean routes fell by between 13-14%, while the two major routes fell by 9.33% and 7.77% respectively this week; There are more overtime ships on European routes, which is one of the main reasons for the decline in freight rates. At the same time, the decline in the West and East of the United States also narrowed significantly from the pre-holiday high levels, at 2.51% and 1.28%, respectively. However, it is worth noting that the peak season surcharge of $1,200 per large box has been discontinued this month.

Shipping companies and freight forwarding industry insiders said that although the volume of cargo is still less after the resumption of work after the holiday, the number of ships in the market has also decreased accordingly. This was mainly due to the large seasonal reduction of sailors and the fact that the strike in the eastern part of the United States slightly affected the return time of vessels. In addition, the recent frequent typhoons in Asia have caused port congestion at many terminals, which has also led to the need for port skipping or empty flights to resume the shipping schedule, which has increased the pressure.

After entering the traditional off-season in the fourth quarter, freight rates are facing greater downward pressure. According to the freight forwarder, COSCO and other carriers are considering canceling the special price of the US line because the gap with the spot price is too large. At the same time, some shipping companies have informed that the European freight rate will be extended to the end of the month, and will be adjusted immediately according to the cargo load status.

In response to market changes, Alliance shipping companies adjusted their capacity after Golden Week. From September 30 to November 3, a total of 100 flights were cancelled on the east-west routes from Asia to Europe and the United States, with a cancellation rate of 14%. Of those, 63% of cancellations were on the Transpacific Eastbound route, 23% on the Asia-Nordic and Mediterranean routes, and 14% on the Transatlantic Westbound routes.

Industry insiders expect that freight rates are expected to stop falling next week. At present, the shipping company is studying the pricing strategy on October 15. Some airlines are considering measures such as canceling preferential rates, but because this is too far from the average fare, they need to discuss how to increase the price in order to be accepted by the market.

SCFI index

The freight rate from Shanghai to Europe was 2040 US dollars / TEU, down 210 US dollars, or 9.33%;

The freight rate from Shanghai to the Mediterranean Sea was 2369 US dollars / TEU, down 172 US dollars, or 6.77%; The freight rate from Shanghai to the West Coast was 4,730 US dollars / FEU, down 122 US dollars per week, or 2.51%; The freight rate from Shanghai to the East of the United States was 5554 US dollars / FEU, down 72 US dollars per week, or 1.28%. The freight rate of the Persian Gulf route was 986 US dollars, up 24 US dollars per week, or 2.49%; The freight rate of the South American route (Santos) was 6,341 US dollars, down 98 US dollars per week, or 1.52%. The freight rate of the Australia and New Zealand route was 1,966 US dollars, down 42 US dollars or 2.1% for the week. The freight rate of Southeast Asia Line (Singapore) was 389 US dollars, down 7 US dollars per week, or 1.77%.

WCI Index

WCI fell 4% for the week to $3,349 per jumbo box, 68% below the September 2021 peak of $10,377 but 136% above the pre-pandemic 2019 average rate of $1,420.

The year-to-date average composite index is $4,079 per jumbo, $1,248 higher than the 10-year average rate of $2,831. This week, the freight rate from Shanghai to Genoa fell 2%, down $64 to $3,784 per large container; Freight from Shanghai to Rotterdam fell 6%, down $224 to $3,591; Freight from Shanghai to New York fell 3%, down $161 to $5,761; The freight rate from Shanghai to Los Angeles fell 5%, down $239 to $5,019.

Drury expects freight rates to continue to decline slightly in the coming weeks.