Sep 11, 2024 04:02 AM
ECONOMY
Freight Rates Plummet as China’s Export Growth Slows and U.S. Inventory Replenished
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A container port at Lianyungang Port, Jiangsu province, on Sept. 10, 2024.
Freight charges for container shipments are falling dramatically as China’s exports slow down. The Shanghai export container settlement freight index for the North America route has dropped nearly 40% from July highs.
The traditional shipping period for the Christmas retail season runs from August to September, but shipments began as early as April this year. That would indicate container shipments will decline from September to November, according to research by Huatai Futures.
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- Freight rates for container shipments are dropping significantly due to slowed exports from China, with the Shanghai index for the North America route down nearly 40% from July highs.
- U.S. inventories are healthy post-May to July shipments, suggesting weakened freight demand ahead, while container shipments from East Asia to Europe dropped from 1.75 million TEUs in June to 1.58 million in July.
- Potential strikes at U.S. ports and upcoming new vessel deliveries could impact shipping dynamics, with global shipyards set to add 200,000 TEU of container ships by year-end.
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Who’s Who
- Huatai Futures
- Huatai Futures conducted research indicating that container shipments are expected to decline from September to November. They attribute the initial surge in freight rates to factors such as the Red Sea crisis and tariff uncertainties. They also project that global shipyards will deliver an additional 200,000 TEU of container ships by the year's end, which would help address capacity gaps.
- Flexport
- According to the article, Flexport is a digital freight forwarder that reported U.S. inventories are now at healthy levels following a surge in shipments from May to July. With inventory replenishment largely complete, the report expects freight demand to weaken in the coming weeks.
- United States Maritime Alliance
- The United States Maritime Alliance represents employers at container ports in the U.S. and is currently in stalled negotiations with the International Longshoremen's Association. The potential for a strike, as the current contract expires on September 30, could result in port congestion and shipping delays, tightening shipping capacity on routes from Asia to North America and Europe.
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What Happened When
- April 2024：
- Shipments for the Christmas retail season begin as early as this month.
- Mid-April 2024 through to July 2024：
- A surge in shipments occurs due to factors such as the Red Sea crisis, tariff uncertainties, and overseas inventory replenishment.
- May 2024 to July 2024：
- A surge in shipments is observed in the United States.
- June 2024 to July 2024：
- Shipments from East Asia to Europe fall from 1.75 million TEUs in June to 1.58 million TEUs in July.
- July 2024：
- The Shanghai export container settlement freight index for the North America route hits its peak.
- July 2024：
- China's export sector experiences a notable downturn with a 2.3% monthly drop in exports.
- August 2024：
- China's export sector sees a 2.7% increase in exports.
- August 2024 to September 2024：
- Traditional shipping period for the Christmas retail season.
- Monday (specific date not provided)：
- The Shanghai export container settlement freight index fell 10.6% for the European route from last week.
AI generated, for reference only
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