Container lines slash even more services to prop up rates

According to Alan Murphy, CEO of Sea-Intelligence, canceled sailings imply a pandemic-induced demand decline of around 6.4 million twenty-foot equivalent units (TEU) so far. If there were no further cancellations — which Murphy considers “quite unlikely” — this would equate to a full-year demand decline of 4%. Sea-Intelligence has previously estimated that cancellations will continue and full-year demand could ultimately fall by around 10%.

Freight rates still steady

The Freightos Baltic Daily Index tracks the spot cost to ship a forty-foot equivalent unit (FEU) container along various trade lanes.

In the China-to-U.S. West Coast lane (SONAR: FBXD.CNAW), the rate was $1,577 per FEU on Tuesday. The rate has increased 2% over the first two weeks of April, is flat year-on-year, and is up 44% from two years ago.

The trend is not as positive for carriers in the China-to-U.S. East Coast lane (SONAR: FBXD.CNAE). The rate was $2,646 per FEU on Tuesday, down 6% since the beginning of April and down 4% year-on-year, but still up 24% from two years ago.

Looking at the global composite (SONAR: FBXD.GLBL), the rate was $1,461 per FEU on Tuesday, up 1% since April 1, 6% year-on-year and 34% from two years ago.

According to Eytan Buchman, chief marketing officer of Freightos, “Global demand for many items other than essential household goods and medical supplies continued to dip, [and] larger multinational importers appear to be anticipating this to an even stronger degree, reducing orders or slowing imports.

“To keep ocean freight rates from collapsing, ocean carriers have blanked a record number of sailings. The cancellations appear to have kept rates steady this week,” Buchman said. Click for more FreightWaves/American Shipper articles by Greg Miller