The container shipping market is weak and the capacity is oversupplied


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Recently, sea freight prices have continued to fall, with the Baltic Sea Freight Index (FBX) falling by more than 61% from its record high in September last year. The container shipping market is weak, and "one container is hard to find" has become "one cargo is hard to find". Industry insiders said that since the beginning of this year, the growth of consumer demand in the global market has been sluggish, and the superimposed epidemic factor has caused consumer spending to shift from consumer goods to the service industry, further reducing the demand for container shipping.


Capacity oversupply


FBX shows that on September 23, the global composite index was US$4,305/FEU (40-foot container), a drop of more than 61% from the historical high of US$11,109/FEU in September last year. Among them, China (East Asia)-North America West Coast fell 10% from last week to $3,545/FEU; China (East Asia)-North America East Coast fell 8% from last week to $7,835/FEU; China (East Asia)-Mediterranean was from last week A sharp drop of 18% to $6,748/FEU; China (East Asia)-Northern Europe fell more than 4% from last week to $7,284/FEU.


Data shows that as of September 22, the Drewry World Containerized Index (WCI) has been declining for 30 consecutive weeks. This week’s WCI fell 10% from last week to US$4,471.99/FEU, down 57% from the same period last year; Shanghai exports The Container Freight Index (SCFI) has fallen for 15 consecutive weeks, and this week fell 10.4% from last week to 2072.04 points.


The oversupply of shipping capacity in the shipping market is the main reason for the decline in freight rates. Institutional data shows that in the third quarter of this year, global container shipping capacity increased by 3.9% year-on-year, but due to sluggish demand, the idle capacity rate hit a five-year peak.


Affected by the drop in freight rates, many shipping companies have begun to suspend sailings in order to change the situation of excess supply. Data released by shipping consultancy Drewry showed that during the five-week period from September 19 to October 23, out of a total of 750 scheduled voyages on major routes such as trans-Pacific, trans-Atlantic, Asia-Nordic and Asia-Mediterranean, 122 sailings were cancelled, with a cancellation rate of 16%. Among them, the world's three major shipping alliances have successively cancelled a total of 101 voyages. The largest number of cancelled voyages was the 2M alliance with 40 voyages; the THE alliance with 33.5 voyages; and the fewest Ocean Alliance with 27.5 voyages.



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