The shipping industry is now returning to normality and is in a downward spiral. The cost of shipping goods from China has slumped to the lowest level in more than two years as the world economy stumbles, dimming prospects for container carriers that turned in record profits during the pandemic.

China’s shipping industry has reported a 60 per cent drop-in freight rates, as congestion linked to Covid-19 eases globally and the country’s foreign trade slows down. Spot rates, as recorded by the Shanghai Containerized Freight Index (SCFI), are on a “fast-declining trend”.

In what’s typically the peak season for seaborne trade, global demand for Chinese goods is waning instead as consumers cut back spending because of inflation and the shift away from goods toward services.

Container shipping has been warned to brace for a hard landing rates-wise as multiple indices around the world plunge further.

The steady fall in spot container rates is putting pressure on carriers that have been pushing to sign more long-term contracts with customers as those prices soared into early 2022. Many of the carriers’ customers want to re-negotiate for discounts.

Agents and freight forwarders in Asia have received calls recently from cargo owners asking to lower their shipping costs, with some exporters complaining about the unfairness of paying almost twice as much on contracts than the spot market. Shipping companies want exporters to bulk up their volumes, but many are refusing to because of the weaker economic outlook.

Reference:

https://economictimes.indiatimes.com/small-biz/trade/exports/insights/weaker-demand-for-goods-from-asia-marks-end-of-shipping-bonanza/articleshow/94444106.cms

https://fijisun.com.fj/2022/09/21/chinas-shipping-industry-face-60-drop-in-freight-rates/

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