The plateauing of the container shipping markets, called by Splash on October 1, is now showing steep declines, albeit from very high levels.
In what has been an unprecedented, record year for liner earnings, with the shipping lines on track to post profits in excess of $150bn, there are now multiple signs that the peak has passed with spot rates seeing their biggest drops in more than a year and the red-hot charter market no longer recording daily new high fixtures.
Drewry’s composite World Container index decreased 4.9% to $9,195.41 per 40ft container this week, the steepest decline in global spot prices for more than 12 months.
According to the WCI, the Shanghai-Los Angeles rate dropped $1,119 per feu to a level of $9,857. This marks the first time since July where rates are below $10,000 per feu, and serves as a reminder that this year’s peak season has now passed.
A similar trend is seen from Shanghai to New York with rates dropping $887 per feu to $12,667. This is the first time since July that the level has been below $13,000.
Declines on Asia-Europe are much more modest. Shanghai-Rotterdam dropped $264 this week, while Shanghai – Genoa was down $430 per feu.
Also dropping today was the Shanghai Containerized Freight Index – another key spot index – which declined 31 points.
“Spot rates are markedly down compared to the extreme peak in mid-September, however, they are also still at levels that are extremely high in a historical context,” commented Lars Jensen, the CEO of container advisory Vespucci Maritime. Shanghai – Los Angeles rates are down $2,500 since their peak in September, he pointed out as an example, but are still up by $8,400 compared to their average in November of the pre-pandemic year of 2019.
The spot declines come as many major lines focus far more on securing clients on long-term contracts. Maersk, this week, for instance, revealed how 64% of its liner clients are now fixed on long-term contracts, up from 50% at the start of the pandemic.
On the chartering side, where crazy prices of $200,000 a day for old panamaxes were being paid two months ago, there are also signs that the market has cooled in recent days.
The New Contex boxship chartering index, for instance, recorded an overall decline of 1.8% last week, something not seen since July last year with the lack of available tonnage limiting fixing possibilities.
Despite the drop in rates, congestion at key gateways remains an issue. The Southern California Marine Exchange has requested vessel operators to remain up to 150 miles offshore for safety concerns in the anchorage areas with the latest count showing 70 boxships waiting off Los Angeles and Long Beach for berth space to open up and sizeable queues evidenced at other North American terminals and key Asian transshipment hubs.