Freight rates on China-US west coast routes plummeted by 22%. Recently, a sharp correction in freight prices from China to the U.S. West Coast has attracted significant attention. Compared with US$20,586/FEU (40-foot container) on September 10, the price on October 7 dropped by nearly US$5,000, a drop of 22.25%. The sea freight from Ningbo Port and Shanghai Port to the west coast of the United States has decreased in just three days – this amount is nearly the same as the last three-month increase.
Of course, the adjustment of shipping prices between China and the United States has made many small and medium-sized foreign trade companies that have suffered from soaring crazy freight rates see the hope of their business. Why is the freight rate of the Western Coast callback? How will shipping prices go in the future? Ocean Treasure will do some simple analysis
Freight rates on China-US west coast route plummeted by 22%.
In recent years, the covid 19 has caused problems in the global seafood product supply chain. The congestion of terminals in many countries has led to high global ocean freight rates. Take the China-US route as an example. The China-US west coast route has risen from the usual US$5,000 to US$22,000. Faced with such high shipping costs, many seafood products importers and exporters have chosen to wait and look forward to the shipping price getting back to normal. The total shipping price has risen by more than 400% over the past year or so. Recently, the rising trend of shipping prices has been stable but still maintained at a relatively high level. Once there is a sharp drop, it will usher in an increase in the next week.
On the FBX data, the global container freight price fell from US$11,109 on September 10 to US$9,949 on October 8, a decrease of 10.4%. The most significant decline is the popular route China/East Asia- America west coast. The price has fallen for four consecutive weeks. On September 10, it was 20,586 USD/FEU, and on October 8, it fell to 16004 USD/FEU, a drop of nearly 5,000 USD, or 22.25. %. But on October 15, it rebounded again, and the price was $17,377/FEU, an increase of 8.5%. As you can see, the downward trend is already obvious
Golden Week, Power Cut, More Shipping lines
So, What is the main reason behind the sharp drop in U.S. shipping rates? Mainly due to the increase in overtime shipping capacity, coupled with China’s Golden Week holiday and China’s power cut policy that was unexpected to everyone, the U.S. West coast route just plummeted without any precautions.
What’s the trend for Q4?
For this current Q4, on the one hand, international port congestion and capacity tension have not been alleviated. There are still ships in Europe, the United States, and various ports in constant congestion; on the other hand, the Christmas holiday is coming, and the demand in Europe and the United States is still. There is a high probability that shipping prices will continue to run high with demand growth.
At present, the global shipping supply and demand are seriously imbalanced. And the situation that one container is hard to find has yet to show obvious signs of alleviation. The global trade and transportation are not smooth, which dramatically interferes with the pace of customer orders and shipments. The U.S. government has also introduced a seven*24-hour port operation mode, which is also unprecedented. It is foreseeable that with the advent of Christmas, the entire global freight forwarding will usher in new challenges.
The recent price drop is foreseeable, and next year, the sea freight price callback is a particular trend. But the price level of the callback is still high. At that time, the cost of raw materials and other expenses in the entire market will keep the final product price stable, at least not continuously increasing prices. Therefore, from the perspective of freight, the price reduction is affirmative. Still, for the product itself, the increase of raw materials. The increase of labor costs, the extension period of production, and delivery, all these factors will undoubtedly affect the final price of seafood products. For the seafood market, the wait will bring more market changes, which will bring the product price to an up-trend level.