According to Xeneta’s latest shipping index, long-term freight rates rose 10.1% in June after a record 30.1% rise in May, meaning the index was 170% higher than a year earlier. But with container spot rates falling and shippers having more supply options, further monthly gains seem unlikely.

Spot freight rates, the FBX Actual Shipper Price Index, the latest edition of the Freightos Baltic Index (FBX) on July 1 shows that in terms of transpacific freight:

• The freight rate from Asia to West America fell by 15% or US$1,366 to US$7,568/FEU.
• The freight rate from Asia to US East fell by 13% or US$1,527 to US$10,072/FEU

As for long-term freight rates, Xeneta CEO Patrik Berglund said: “After a sharp increase in May, another 10% increase in June pushed shippers to the limit, while shipping companies made a lot of money.” He added “Having to question again, is this sustainable?” said Mr Dao, with signs that “may not be the case”, as falling spot rates could tempt more and more shippers to give up traditional contract. “As we enter another period of turmoil, shippers will turn into risk-averse buyers. Their primary concern is which trades are made in the spot and contract markets, and for how long. Their goals will be, according to their respective business needs to achieve the best possible balance between the two markets,” said Mr Berglund.

Drewry also believes that the container shipping market “has turned” and that the ocean carrier’s bull market is coming to an end. Its latest quarterly Container Forecaster report said: “The decline in spot freight rates has become entrenched and has now continued for four months, with weekly declines increasing.”

The consultancy sharply revised down global port throughput growth this year to 2.3% from 4.1%, on the back of negative demand forecast by economists. In addition, the agency said that even a 2.3% cut in growth is “certainly not inevitable”, adding: “A more severe slowdown or contraction in throughput than expected would both accelerate the decline in spot rates and shorten the elimination of ports. The time it takes for the bottleneck.”

However, continued port congestion has forced shipping alliances to adopt a strategy of air sailing or slide sailings, which may support rates by reducing capacity.

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