The SCFI (Shanghai Containerized Freight Index) indicated a further slide in freight levels and is expected to reach the pre-pandemic level by December. In November mid, it stood at 1,307 points, dipping 74% from an all-time high of 5,110 points from January, and taking the index near the 1,000 points seen in January 2020, just before the Covid-19 crisis exploded.
Shanghai-North Europe freight rates, having peaked at US$15,600/TEU on 14 January, dived to US$2,350/TEU on 18 November. On the same date, Shanghai-US West Coast rates dipped to U$1,550/FEU, from a high of US$8,100/FEU in February. Shanghai-US East Coast routes lost 67%, from a high of US$11,800/FEU in January to US$3,900/FEU on 18 November.
The fall was also registered for shipments from Shanghai to the Persian Gulf, South America, and Australia. The all-time high rates are not witnessing what shippers actually paid, as tight container availability forced them to pay premiums to get a slot.
The chief reason for the dipping rates is the extreme fall in headhaul cargo demand, a trend going back to August. Global inflation, produced by mounting energy prices following Russia’s incursion of Ukraine in February, has discouraged consumer expenditure. In turn, retail sales have been lethargic, leading to warehouses in Europe and the United States becoming fully occupied.
Container Trades Statistics show an immense drop in the Far East – North America volumes of 25% in September. Bulks shipped from Asia to Europe are also estimated to have plunged 20% in the same month. The standard Q3 peak effect of additional shipments at the end of September before the Golden Week holidays in China in the first week of October did not occur this year.