No immediate improvement in conditions The month following Chinese New Year is typically a period where market conditions ease a bit on the main Asian export trades. Given the extremely problematic congestion issues in the global market shippers might have hoped for a similar easing this year as that alleviate pressures on other trades. 15 MARCH 2022 Unfortunately, the data available presently show no major improvement. There are good news out there If we start out looking at the positives, from a shipper perspective, there is a glimmer of hope when it comes to both freight rates and congestion. For example, the SCFI spot rate indicator for Asia to North Europe shows spot rates dropping by almost 800 USD/FFE. The overall SCFI index covering a range of Asian export trades is down 5% compared to before Chinese New Year. Outside the ports of Los Angeles/Long Beach the long queues have been reduced from more than 100 vessels, in January, to less than 50. Given these developments, shippers might feel slightly more hopeful as it does convey a sense of rapid improvement. But only looking at these developments would be to misconstrue what other data points tell us about developments. Freight rates remain high While the SCFI index is indeed down, there are several other important aspects. One is the fact that an 800 USD/FFE drop is not much of a decline in the current environment. The SCFI spot rate from Asia to North Europe is still at almost 15.000 USD/FFE. In terms of the overall index, it is true that the total SCFI index is down 5%, but at the same time the global WCI index is only down 1.5% and the global FBX index is only down 0.5%. The WCI and FBX include a broader geographical scope than the SCFI, as well as backhauls. Hence, the reality is that there is only limited broad declines in the spot market globally, and the actual rate levels remain historically high. At the recently concluded TPM container shipping conference in California, data presented by Xeneta showed that, in the Pacific, annual contract rates for 2022 and were being concluded at levels more than double of what they were in 2021. Vessels are still queuing In terms of congestion the reduction in the queue outside Los Angeles also needs context. Vessel queues have grown substantially elsewhere in the US, most notably in Charleston where 30 vessels now lie in wait. Hence part of the reduction in the queue is simply due to the vessels now queuing at other ports. Additionally, there was a large decline in vessel departures from Asia to the US West Coast around Chinese
Download PDF file
Cookie policy