The Shanghai Containerized Freight Index (SCFI) plunged 10% week-on-week and is down nearly 19% over the last 14 days.
Marcus Hand | Sep 09, 2022
The bell weather SCFI as of 9 September stands at 2,562.12 points down 285.5 points on the level published on 2 September, a drop of 10%. The 10% fall in the container spot rate index follows a 9.7% slide in the previous week, and it has dropped some 18.8% over the last two weeks.
The SCFI now stands at almost half the record 5,051 points level it hit back in January this year.
Related: Fundamental support for ultra-high container spot rates disappears
The Drewry composite World Container Index (WCI) published on Thursday also showed a continued falling trend if less sharply than the SCFI. The index decreased by 5% to $5,378.68 per feu compared to the previous week. It is the 28th consecutive weekly decrease of the WCI which has dropped by 47% compared with the same week in 2021.
Drewry said the sharpest decrease was seen on the Shanghai – Los Angeles route dropping 14% or $780 to $4,782 per feu.
Related: Xenata survey flies in the face of negative container sentiment
While both indexes remain far above historical averages the continued sharp rate of spot container freight is increasingly drawing questions as to whether the box sector is now facing a sharp correction with the impact filtering into all important long term contract rates.
Bjorn Vang Jensen, VP Advisory Services – Global Supply Chain for Sea-Intelligence, said in a post on LinkedIn earlier this week, “I don’t know a single medium-large BCO who is not renegotiating right now, or gearing up to do so within the next month.” Jensen has had a career that has spanned both the shipper and carrier sides of the equation.
By contrast Xeneta in its latest Ocean Pulse Survey found little evidence of shippers calling for negotiations and rates falling sharply. Peter Sand, Chief Analyst at Xeneta, said:
“We’d say, from our dialogue with some of the world’s biggest shippers, that the outlook is actually significantly more stable.”
Meanwhile, on much more negative note HSBC Global Research has forecast that container spot rates could fall to pre-pandemic levels, although more important for shipping line contract rates should settle above pre-pandemic levels. The net result though would be an 80% drop in container line profitability in 2023/24 over record levels this year.
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Reference: https://www.seatrade-maritime.com/containers/key-spot-container-freight-index-rate-falls-10-week