According to Xeneta, the market analysis company for the shipping industry, spot rates from the Far East to the US West Coast are falling fast. Prices, which were as high as USD 9,000 per FEU in May, had collapsed to USD 3,000 per FEU on 5 October, with a USD 500 fall on 1 October alone.

Xeneta Chief Analyst Peter Sand called it “a dramatic decline”, but one that should also be seen in the context of longer-term trends.

“It really is an eye-catching development,” he said. “Shippers, who have had their backs against the wall in negotiations for so long, are seeing the market turn much quicker than many anticipated. They can now move three 40 ft containers for the price they paid for just one only a few months ago. Carriers, on the other hand, seem powerless in their efforts to protect rates, as we see widespread blanked sailings failing to soften the precipitous downward curve.”

However, despite the fact that rates have fallen so dramatically there is still a long way to go, according to Peter. “The market has been so strong, for so long, that it’s easy to forget where rates have climbed from. Even though we’re now at the lowest level since July 2020, we only have to go back to October 2019 to see spot rates at just USD 1,300 per FEU. Which begs the question, how much further might they drop in the coming weeks in the face of ongoing weak demand and uncertain macroeconomic indicators? We’d suggest there’s more development dead ahead.”

Photo: Peter Sand.