Drewry’s composite global spot box index ducks below $9,000 per feu for the first time since July

Drewry’s World Container Index, a global average of spot freight rates, dipped below the $9,000 per feu level today for the first time since July. However, analysts caution it is still too early to say whether the slide is anything other than a normal post-Chinese New Year deceleration.

Drewry’s composite index, published every Thursday, dropped 3.8% from $9,179.98 to $8,832.23 per feu, its third consecutive week in decline. Transpacific westbound from Shanghai to Los Angeles registered among the biggest drops recorded this week, down by more than $800 per feu to $10,154. All rates however remain at many multiples over their historical averages. The all-time average composite index since June 23 2011 is $2,373.53.

“It does seem rather odd that at a time of soaring fuel costs and ongoing supply chain disruption that freight rates are declining, even if they do remain extremely high,” commented Simon Heaney, senior manager of container research for Drewry. 

The pace of the decline on China to North Europe seems steep

Peter Sand, chief analyst at Xeneta, told Splash today: “Xeneta data clearly shows falling spot freight rates on all main trades in March. And while markets have been volatile since reaching the ceiling in September, October, the pace of the decline on China to North Europe, for instance, seems steep. Falling rates are much welcomed by the global shippers, but if the origin of it is fading consumer demand, it might be bittersweet. The next weeks will give more certainty into the reasons.”

Lars Jensen, CEO of liner consultancy Vespucci Maritime, told Splash that the decline in the composite index is still at a level where it is impossible to reliably distinguish it from the normal decline after Chinese New Year (CNY).

Thus far in 2022 the index has declined 9% from the CNY peak to now. In 2021 the index declined 7.2% from Chinese New Year to late March before picking up again. In 2020 the index declined 17% from Chinese New Year to late April before stabilising. At mid-March it was down 9%, like now. In 2019 the index declined 27% from the Chinese New Year peak, bottoming out in late March.

Container carriers have been looking on as Covid cases sweep across the nation with many areas including Shenzhen in lockdown. Unlike last year’s Shenzhen lockdown, port operations are continuing normally, albeit operations at factories and trucking companies in the hinterland have been hindered.

“Depending on the extent of the current disruption, it could be enough to send transpacific prices up once again,” suggested Judah Levine, head of research at Freightos in a recent update.

Asia-Europe demand appears to be waning, Levine said.

“With rising costs and inflation made worse by the war, and some additional ocean capacity as carriers boycott Russian cargo, ocean rates have fallen more than 8% since the start of the year,” Levine said.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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