Ocean Freight Cost Coming Down And The Carrier Cancel Voyages In Week 31-35

August 15, 2022

Southeast Asia to Singapore route is the deepest decline, following last week's decline of 3.6%, the latest week fell by 4%, falling below 1000 points. Industry insiders pointed out that the Southeast Asia route is more volatile, as long as the cargo increases, the freight rate will immediately rise, once the cargo is reduced, the freight rate is prone to go down. The latest data released by other major freight indices show that spot market rates continue to fall. The World Container Freight Index (WCI) has declined for 22 consecutive weeks, with the latest WCI composite index falling 0.9% week-on-week to $6,761.63/FEU, down 28% from a year ago. Only Shanghai to Rotterdam freight rates rose 1% or $62 to $9,154/FEU. drury expects rates to continue to fall in the coming weeks.

In the next 5 weeks (week 31-35), the three major shipping alliances around the world cancel 76 voyages one after another. The largest number of cancellations was made by the 2M Alliance with 30 voyages; THE Alliance with 25 voyages and the smallest Ocean Alliance with 21 voyages.

Out of a total of 756 scheduled sailings on major trans-Pacific, trans-Atlantic, Asia-North Europe and Asia-Mediterranean routes, 100 sailings were cancelled between weeks 31 and 35, a cancellation rate of 13 percent. According to Drewry's data for this period, 68 percent of the empty sailings will occur on the trans-Pacific eastbound trade routes during this period.

Increasing congestion at European terminals and increased detention times for imported containers have led to continued increases in yard utilization and high workloads, thereby negatively impacting terminal operations, throughput and resources.

Backlogs of cargo continue to plague North America and Europe. Clearly, the current market conditions will take time to return to normal. This follows a report from a platform that shipping lines are adopting more aggressive empty shipping strategies to counteract the decline in demand. It also said that shipping companies will also use "other strategies", including slower sailing, to support freight rates and mitigate the impact of soaring fuel costs.

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