The Chinese new year has always been a profitable time for China with increased volumes and freight rates. But, the new year for 2023 has been the worst so far. Every year the spot rates for container loading in China witnessed a 12% hike just before New Year, similarly, the average rates for all container loading in China will end up 4% higher. This year both rates are continuing to fall.
The Chinese export container rates are measured by CCFI (China Containerized Freight Index) and there has been a 50% drop since February 2022 and stood at as low as 1730 seven weeks ago. Niels Rasmussen, Chief Shipping Analyst at BIMCO stated that from 2011 to 2020, there was an average increase of 3%, just 10 weeks before CNY, 2012 was the worst year when CCFI fell 6% and 2020 was the best which witnessed 8% increase. So far, the development in 2023 is the worst in the last 13 years. The CCFI is currently showing worse-than-normal development in the trade lanes. The index has fallen to 34 and 57% respectively to Europe and the Mediterranean in the last seven weeks, however, the exports to US West Coast and East Coast have dropped by 26% and 27% respectively.
As highlighted in BIMCO’s latest Container Market Review and Outlook, supply growth is expected to outpace demand growth in 2023 due to the large number of planned new-build deliveries, which will increase pressure on freight rates. Cargo volumes may recover from current levels as companies adjust inventory levels, but this is unlikely to be enough to improve supply demand unless all ship operators take steps to match the volume they offer with market developments, which they apparently have not been able to do until today or don’t want to do it.