Do Factories Still Have Orders as Sea Freight Rates Plummet by 80%?

According to data from the Baltic Shipping Exchange, in January this year, the price of a 40-foot container on the China-US West Coast route was about US$10,000, and in August the price was about US$4,000, a plunge of 60%, compared to last year's peak of US$20,000 average price, a drop of more than 80%.

Even the recent freight forwarding circle exploded Yantian to Long Beach port big container 2850 U.S. dollars to receive the offer, fell below 3000 U.S. dollars!

Asian near-ocean line entry threshold is low, fluctuations are also more obvious, according to the Shanghai Shipping Exchange Southeast Asia Container Freight Index (SEAFI) data, September 9, the latest period of quotes Shanghai - Vietnam Ho Chi Minh line, Shanghai - Thailand Linchaban line per TEU freight prices fell to 100, 105 U.S. dollars respectively. The current rate levels are even below cost and unprofitable!

The third quarter of each year is the traditional peak season for maritime transport, but against the backdrop of global inflation, weakening economic expectations and low demand, the shipping industry is not in peak season this year.

As an important participant in the maritime market, container truck drivers have a rather deep sense of the market. In the past years, before the Mid-Autumn Festival and National Day "double festivals", the situation of long queues to enter the port repeatedly occurred due to the cargo owners grasping time to ship, but this year the situation has changed.

Many truck drivers reflect the market is indeed some downturn, soon-to-retire Master Wu confessed that in his more than 10 years in the port container trucking, this year's market can be said to be the lightest.

Industry insiders expect that overseas high inflation squeeze demand, economic downward pressure continues to intensify, compared with last year's shipping prices of tens of thousands of dollars, the fourth quarter of the global container market is still not optimistic, or there will be a peak season is not a strong market, freight prices will further decline.

But this for foreign trade people, in fact, is crazy shipping prices finally returned to a relatively reasonable position.

The two major problems that plagued foreign traders last year: exchange rates and shipping costs, have now been alleviated, the exchange rate between the RMB and the USD has broken 7, and shipping rates have returned to two years ago.

According to Tan Yaling, chief economist and president of the China Institute of Foreign Exchange Investment, the depreciation of the RMB is now not enough to tide foreign trade enterprises over.

Influenced by a combination of high inflation rates in Europe and the US, geopolitical conflicts in some regions and the continued spread of epidemics, their market demand has been declining. Coupled with the large amount of previously hoarded stocks still to be digested, many importers have had to reduce or even cancel their orders for goods, so there has been a significant contraction in global shipping market demand.

As gasoline and food prices soared, European and American consumers stopped flocking to buy clothing, household goods, household appliances and kitchen utensils, leading to a huge increase in retailers' inventories.

Major US retail importers are not optimistic about US consumption expectations and have already cut retail orders significantly. Wal-Mart has cancelled billions of orders; Target has cancelled over $1.5 billion in orders and said it will take necessary action, including price cuts and order cancellations. Both Wal-Mart and Target are forcing some suppliers to absorb the rising costs.

European and Japanese importers are having an even harder time, with the euro depreciating to parity with the dollar and the yen falling to a new low in more than 20 years, causing their sourcing costs to rise sharply, and some customers are simply afraid to place orders.

A recent questionnaire survey conducted by the CCPIT for more than 500 enterprises shows that the main difficulties faced by enterprises at present are slow logistics, high costs and few orders.

56% of enterprises said that raw material prices and logistics costs are high, for example, shipping routes, although short-term decline, but still in the medium and long-term high. 62.5% of enterprises said that orders are unstable, short single small single more, long single large single less.

Enterprises' demands were mainly focused on maintaining the stability and smooth flow of international and domestic logistics, implementing policies to relieve hardship and help, and facilitating the movement of people across borders. Some enterprises are looking forward to the resumption of domestic exhibitions and the liberalisation of overseas participation in order to obtain more orders.