Freight Rates Drop By Up To 40% To USA & Europe As Australia Freight Rates Rise, Retailers To Be Affected
Freight charges for container shipments are dramatically falling by up to 40% on some routes such as the USA and Europe, but not for shipping to Australian ports according to local freight Companies with some suppliers claiming that local freight rates are among the most expensive in the world.
Data from the U.K.’s Container Trade Statistics revealed that shipments from East Asia to Europe had already fallen in July, resulting in freight rates dropping.
Freight forwarders report that container shipping rates on major east-west routes to the USA have been dropping by nearly $1,000 per 40-foot (12-meter) container each week for the last few months, as shipping lines compete aggressively to fill ships.
Load rates remain high at 90% to 95%, but insufficient demand is forcing companies to slash prices.
However, the story is different on the Asia Australia route with freight rates defy global gravity, with spot rates up over USD1000/TEU in a month and more extra-loaders scheduled to meet demand.
The Shanghai-Melbourne spot rates, as measured by the Shanghai Containerised Freight Index, hit USD2268/TEU for the second week of September, compared to 1776/TEU for the same week in August.
In the second week of April, they were as low as USD701/TEU meaning they’ve more than tripled in six months with retailers including JB Hi Fi, Harvey Norman and discount groups including Big W & Kmart having to pass on the costs.
ANL has announced what it calls Stage 2 of its Peak Season Surcharge, effective from 15 October, of USD300 per dry and reefer TEU and 600 per dry, high-cube and reefer FEU for all cargo from North & East Asia to East Coast Australia. This applies on top of the existing PSS.
The Shanghai export container settlement freight index fell 10.6% for the European route last week from the previous week, down nearly 30% from its July high.
The U.S. West Coast route index dropped 6.9% for the week, down 40% from its July peak.
The traditional shipping period for the Christmas retail season runs from August to September, but shipments began as early as April this year as suppliers get ready for Black Friday sales and the peat Christmas period.
Some observers claim that United States inventories are now at healthy levels following a surge in shipments from May to July, according to a market report from digital freight forwarder Flexport, with inventory replenishment largely complete, freight demand is expected to weaken in the coming weeks, resulting in prices being slashed.
China’s export sector saw a notable downturn in July, with a 2.3% monthly drop in exports that month, despite a 2.7% increase in August, according to data from the General Administration of Customs.
This slowdown is reflected in the sharp drop-in freight rates to key Countries other than Australia.
Nikki Asia reports that the volatility in shipping rates can be attributed to a combination of factors.
The Red Sea crisis, tariff uncertainties and overseas inventory replenishment had driven a surge in shipments from mid-April through to July, causing freight rates to rise dramatically.
However, the delivery of new vessels is beginning to ease the supply constraints caused by the Red Sea detours.
Huatai Futures projects that global shipyards will deliver an additional 200,000 TEUs of container ships by the year’s end, helping to fill the capacity gap.