Long-term container freight rates have slumped to their lowest point in two years.
Global long-term shipping rates fell 9.5% in July, adding to a deep collapse that started last year, according to Xeneta market analyst Emily Stausboll.
There is little respite on the horizon given the record numbers of ships being delivered, she added.
“Carriers waiting for higher volumes in July, and in the coming months due to peak season, look increasingly likely to be disappointed,” Stausboll said.
“Even if volumes do increase, and whatever happens to demand, overcapacity is now inevitable as these record numbers of new ships being delivered this year will have a wide-reaching effect,” she said.
Long-term valid contract rates have lost 57.8% of their value since the same period in 2022, according to the Xeneta Shipping Index.
That was compounded by the delivery in June of the highest ever monthly deliveries of boxship newbuildings, with more than 300 000 teu of capacity from 40 newbuildings added to the market.
But low demand remained the underlying factor affecting rates and the figures for July were gloomy across the board.
“The average shipper on the main trades should be paying less than half the rates they were a year ago on the long-term market. Despite an increase in volumes from previous months, global container demand remains down year on year,” said Stausboll.
Glimmer of hope?
That picture contrasts with the spot market, where freight rates have picked up slightly.
Spot rates on the transpacific from Asia to the US west coast rose more than $200 to $1,542 per 40-foot equivalent unit (feu) in the two weeks to 31 July, according to the Freightos Baltic Index. The increases are attributed to transpacific carriers cutting capacity ahead of peak season.
Rates from Asia to Northern Europe remain little changed after sinking to levels of $1,267 per feu.
The Asia-Europe trade should feel the effect this week of general rate increases (GRIs) that carriers plan to push through.
However, there are already early signs these will not be sustained by the market, said digital freight forwarder Zencargo.
“Some carriers have already begun offering discounts on the new increased rates for the second half of the month,” said Zencargo.
Spot rates on the trade have already dropped 1.5% in the past week, the forwarder added.
Attempts by carriers to introduce rate increases earlier in the year have largely been eroded and many predict a similar outlook for the coming August GRIs, Zencargo said.
Lines have started blanking sailings to try to control capacity. The latest to do so was MSC Mediterranean Shipping Company, which on 31 July announced the company would blank the pending Asia-Europe sailing of the 13,102-teu MSC Topaz (built 2012) to adjust capacity.
