Freight was cut in half! Halved in 20 days!

Spot container rates from China to Northern Europe have plummeted, with average rates falling below $1,000 /FEU this week and down by nearly half since the start of the month.

The latest Baltic Freight Exchange FBX index on Friday showed spot rates on the Asia-Northern Europe route fell to $997 /FEU, compared with an average FBX spot rate of $1,743 /FEU on September 1.

In addition, unsolicited offers received by Loadstar this week show all-inclusive prices of well under $1,000 per 40 feet from China to Antwerp, Rotterdam or Hamburg via major alliance shipping lines, valid until Oct. 14.

The hitherto stronger Asia-Mediterranean trade route also came under pressure, with Drury WCI recording a 10% drop in spot prices on the route for the second week in a row, with average prices falling to $1,531 /FEU.

Commenting on the sharp drop in spot rates on the Asia-Northern Europe trade route, Lars Jensen, CEO and shipping analyst at Vespucci Maritime, said the speed of the collapse was comparable to the price wars of 2015-2016.

"We haven't seen spot rates this low in Northern Europe since early 2018, when levels briefly dropped for two weeks," Jensen said. "The price of Marine fuel was around $470 per tonne at the time, while the current price of VLSFO fuel is around $680 per tonne - although all other factors contribute to inflationary costs," the analyst said.

In fact, one carrier contact suggested that the third and final quarter Asia-Nordic route results would be "horrendous". "The real concern is that despite the huge gap, we still don't seem to be able to fill the ships that are sailing," he said.

So far, carriers on the Asia-Northern Europe route have avoided temporary shutdowns by cancelling voyages for weeks on end, but this approach to capacity management appears to be failing.

In contrast, among THE trans-Pacific members of The alliance, Hapag-Lloyd, ONE, Yang-Ming and HMM announced this week that they would suspend PN3 routes from Asia to North America until further notice "given the current market situation."

Xeneta's XSI index shows a relatively modest 4% decline in the average Asian-American spot to $1,998 /FEU this week, while Drury's WCI index to the Eastern United States also fell 4% to $2,900.

Interestingly, according to John McCown's analysis of August imports at the top 10 U.S. container ports, West Coast port imports appear to be recovering some of the imports lost at Atlantic coast ports in the so-called "coastal shift" of the past few years.

According to McCown, import container throughput at US West Coast ports fell 6.6 per cent year on year to 9,139,088 TEU in August, while import container throughput at US eastern and Gulf Coast ports plunged 18 per cent to 9,62,512 TEU, for a cumulative total of 1,866,420TEU, down 12.9 per cent year on year.

However, August 2022 is the last month of the "boom" for container shipping, so McCown's September port throughput analysis will be highly anticipated.

Elsewhere, on transatlantic routes, shipping companies may have had some success in stemming rapid declines in spot rates. Spot freight rates have fallen from a high of $8,000 /FEU a year ago to sub-economic levels below the pre-pandemic norm of $2,000 /FEU.

According to Xeneta's XSI index, spot freight rates from Northern Europe to the U.S. East Coast edged up 1 percent last week to $1,366 /FEU.

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