July 1st, 2022
Container Spot Rate levels are weakening, according to data from the World Container Index (source).
This downward trend represents positive news for shippers, who've experienced extreme increases in rates over the last 12 months. Our prediction is that rates will continue to decline over the next 6 months, albeit will not return to pre-COVID levels. The transference and movement of long-term contract holders to the softening Spot market will affect demand and supply, and therefore lead to a period of sustained rate volatility. We recommend keeping an eye on Spot prices, and negotiating (or re-negotiating) your rates accordingly.
Industry expert Lars Jensen observes: "Not only are rates continuing downwards, but they are also failing to exhibit the beginning seasonal uptick we see under normal circumstances. For Asia-North Europe the seasonal development, using the median, would imply rates should have increased 3% compared to last week – instead they declined 4%. Looking at the past few weeks, the rate level is now 9% lower than what can be explained by seasonality.
On the Asia to USWC trade, the spot rate level is now 15% lower than what can be explained by seasonality. The spot rates are therefore implying that the balance between supply and demand in these key trades are right now markedly worse than what we normally see at this point of the year."
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