Shipping Market Weekly Report: Weak Demand for Transport, Market Freight Rates Continue to Decline

Although China has introduced a series of economic stimulus policies aimed at promoting growth and supporting future development, the short-term impact on the export container shipping market remains limited.

Insufficient Demand and Falling Rates

The recent impacts of two typhoons and the upcoming National Day holiday in China have resulted in delays to scheduled sailings, exacerbating the already weak transport demand. Across major shipping routes, there is a lack of momentum for further growth in demand, particularly on European routes, where overall capacity remains high but loading conditions remain poor, leading to a sustained decline in freight rates. For example, freight volumes on European routes have yet to recover to pre-pandemic levels, putting pressure on pricing.

On North American routes, overall capacity is sufficient this week. However, due to the strike crisis on the East Coast, some cargo volumes have shifted to the West Coast, resulting in a significant drop in East Coast freight rates, with declines reaching double digits. This reflects major shifts in market dynamics. The West Coast remains relatively stable, but ongoing supply and demand imbalances may impact future pricing trends.

Challenges on Middle Eastern and South American Routes

On the Middle Eastern and Indian subcontinent routes, there is ample capacity at the end of the month, with supply exceeding demand, leading to further reductions in freight rates. Market rumors suggest that shipping lines may consider raising rates for Indian routes in mid-October, which could offer a glimmer of hope for the region, although the market's response remains to be seen.

In South America, the lack of growth momentum in transport demand and weakened supply-demand fundamentals have led to continued price declines from previous highs this week. Specifically, on South American West routes, insufficient cargo volumes and excess capacity have resulted in significant rate decreases, illustrating the impact of global economic slowdowns on regional trade.

Developments on Australia-New Zealand and African Routes

On the Australia-New Zealand routes, local demand for various goods continues to weaken, resulting in unfavorable supply-demand dynamics and adjustments in market freight rates. Recent data shows that the market freight rate from Shanghai to the Australia-New Zealand region (including ocean freight and additional charges) is $2,008 per TEU, a decrease of 8.4% from the last period. This trend may prompt exporters to reconsider their transport strategies in response to rising costs.

On African routes, prices in the East and West African markets remain stable, with some shipping lines experiencing slight decreases in rates, averaging around 5%. The North African market has also seen a notable decline. Additionally, on September 21, the Guinean government issued a ban on the manufacture, import, and sale of single-use plastic packaging and items, which may have long-term implications for packaging logistics in the region.

Future Outlook

In conclusion, while the market faces several challenges, the shipping industry is proactively adjusting to evolving demands and the changing policy landscape. As China's economic policies begin to take effect, clients considering CIF or CFR contracts for PET (polyethylene terephthalate) chips should remain vigilant about the potential implications of these policies on future container shipping demand.