Despite a normal rush of cargo for the upcoming Chinese New Year, Chinese export container rates have seen an unusual drop, according to Niels Rasmussen, chief shipping analyst at BIMCO. Normally, spot rates for containers loading in Shanghai would be 12% higher just before the holiday compared to ten weeks prior, while average rates for all containers loading in China would end at a 4% increase. However, this year both spot and average rates continue to decrease.
The China Containerized Freight Index (CCFI), which measures average Chinese export container rates, has seen a 50% decrease since February 2022 and stood at 1,730 seven weeks ago. Last week, the index hit a low of 1,271, marking a 27% drop since mid-November. According to Rasmussen, the development in 2023 is the worst in 13 years, with the CCFI dropping faster than spot rates recorded by the Shanghai Containerized Freight Index (SCFI).
The CCFI for exports to Europe and the Mediterranean have fallen by 34% and 57% respectively in the past seven weeks, while exports to the US West Coast and East Coast have seen a drop of 26% and 27% respectively.
Rasmussen attributed the decrease in rates to a unique market situation in 2021 and 2022, where congestion and a surge in consumer demand led to a strong lead up to the Chinese New Year. However, the current situation in 2023 stands in stark contrast to earlier years, with the CCFI falling at a faster rate than the SCFI.
The shipping industry is closely monitoring the situation as the drop in container rates may have wider implications for global trade and commerce. Companies relying on imports from China may face increased costs, while the decrease in exports may affect the Chinese economy.
It remains to be seen how the situation will develop in the coming weeks leading up to the Chinese New Year, but the current trend is cause for concern for those in the shipping and trading industries. As the world’s largest exporter, any changes in Chinese export container rates have the potential to impact the global economy and businesses worldwide.
