Spot container freight rates to and from Shanghai have steadily deteriorated in the past six weeks, falling to lows not seen since 2016, according to the Shanghai Shipping Exchange’s Shanghai Containerized Freight Index (SCFI).
The SCFI, a composite of spot rates on 13 different trades between Shanghai and the rest of the world, dropped another 4.3 percent last week to a reading of 646.59.
Since the previous Friday, spot rates from Shanghai to Europe slid nearly 5 percent, from $741 per TEU to $704 per TEU, while spot rates from Shanghai to the Mediterranean slipped 2.3 percent, from $665 per TEU to $650 per TEU.
Spot rates from Shanghai to the U.S. West Coast fell 7 percent last week, from $1,016 per FEU to $945 per FEU, while spot rates from Shanghai to the U.S. East Coast declined 3.8 percent, from $2,009 per FEU to $1,933 per FEU.
The index had been steadily rising in the lead up to the Chinese New Year holiday, but has now fallen 26.8 percent since peaking at a reading of 883.59 on Feb. 2, 2018.
To put the overall decline of the SCFI in perspective, the index is currently down 14.8 percent on a year-over year basis.
At this time last year, the SCFI stood at 758.81, with rates from Shanghai to Europe and the Mediterranean at $815 per TEU and $798 per TEU, respectively, and rates from Shanghai to the U.S. at $1,288 per FEU to the West Coast and $2,625 per FEU to the U.S. East Coast.
And according to Patrik Berglund, CEO of rate benchmarking and intelligence platform Xeneta, contract rates in the transpacific are behaving similarly to the spot market, having risen steadily in the weeks leading up to Chinese New Year only to fall substantially since then.
This trend could indicate that the container shipping industry is still struggling with an excess of capacity that has plagued the market for years and was largely to blame for the flood of red ink on container carriers’ financial statements in 2016, Berglund said in a recent blog post.