Container Shipping Market Sees Ongoing Freight Rate Decline, But Recovery Expected in Q2

The container shipping market has witnessed an overall increase in cargo volume, but the pace of shipments has slowed down recently. According to the latest data from the Shanghai Shipping Exchange, the Shanghai Export Container Freight Index has been on a continuous decline since early January, falling for eight consecutive weeks, with a total decrease of over 42%.

Industry analysts suggest that although cargo volumes have increased, the slower pace of shipments may continue to pressure freight rates in the short term. However, there is cautious optimism for the market’s performance in the second quarter, with expectations for seasonal improvements and a rebound in demand. In addition, leasing services for containers in regions like Southeast Asia and Latin America are showing promising growth opportunities.

Currently, the Shanghai Export Container Freight Index stands at 1,436.30 points, marking a decline of over 42% compared to early January. On specific routes, the freight rates from Shanghai to the U.S. West Coast and East Coast ports have fallen by 54% and 48%, respectively, compared to January, indicating a slower-than-expected market recovery, with long-haul freight rates continuing their downward trend.

During the traditional period for signing long-term contracts in the shipping industry, many industry insiders have advised companies to avoid locking into long-term agreements too early. Maintaining flexibility in choosing routes and agreements is crucial to adapt to market changes.

To counter the declining freight rates, shipping companies have implemented measures such as canceling sailings. According to shipping consultancy Drewry, 47 sailings are expected to be canceled on major global routes in the next five weeks. However, due to weak demand and excess capacity, the effectiveness of these measures might be limited.

Drewry’s analysis suggests that global capacity is expected to increase by 31% in April compared to February, and the downward trend in freight rates may continue. Nevertheless, according to Rida Futures, the shipping market is transitioning from the traditional off-season to the peak season, and pricing strategies by shipping companies may provide some support to freight rates. Short-term signs of a market recovery are possible, with spot rates likely entering a phase of stabilization and bottoming out. As manufacturing capacity gradually recovers and seasonal increases in foreign trade shipments take place, there is potential for a recovery in freight rates.