US-China sea freight rates fell sharply after continuously peaking in early September as the tourist season approached and the power shortage in China slowed production, speculators rushed to sell positions. shipping they collect before.
The cost of shipping a 40-foot container from China to the US West Coast nearly halved in the previous four days, from $15,000 to more than $8,000, the CEO of a Shanghai-based shipping company said on September 30. . Spot rates to the US East Coast fell by more than a quarter, from more than $20,000 to less than $15,000.
Before the pandemic, rates were usually around $1,500 and then skyrocketed. Congestion at ports around the world leads to a shortage of containers and a tendency to speculate to profit from the increase in freight rates.
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Yangshan Deep Water Port in Shanghai. Photo: Reuters. |
In the last week of September, ocean freight rates from China to the West Coast fell by nearly half, according to Caixin research from shipping companies. Matson, one of the largest US container shipping companies, also operates on this route.
Matson said it was not involved in the drop in spot rates. Matson announced on October 2 that long-term freight rates for a 40-foot container from China to the US West Coast with the Shanghai Ocean Shipping Exchange (SSE) increased by $200 from a month ago.
An analyst at Tianfeng Securities said shipping companies often set long-term rates, but spot rates really reflect supply and demand.
The drop in spot rates, according to analysts, is mainly due to the approaching holiday season and a decrease in production in China due to a lack of electricity.
Many provinces in China have had to suspend factory production to cope with power shortages or meet government energy consumption control targets. Once the restrictions were in place, speculators quickly sold off their pre-collected spot freight positions, driving rates down even further, according to a Shanghai-based shipping company source. Accordingly, the selling momentum increased sharply when the 7-day national holiday, from October 1 to October 7, in China began.
Experts still disagree about the future trend of ocean freight rates. A study conducted by CSC Financial said that ocean freight rates will remain relatively high in the next two weeks because ports in the US are still congested and the gap between supply and demand remains large.
However, analysts at Tianfeng Securities expect ocean freight rates to gradually decline as export growth may slow down in the fourth quarter, the off-season for transoceanic shipping.
