S&P says ocean freight rates decline on weak demand

Container box rates on key global trade lanes continued to retreat over the course of September as persistently weak demand for Asian exports amid easing supply chain issues across European and American ports dragged spot offers lower ahead of Chinese Golden Week holidays early-October, S&P Global Commodity Insights said in its latest update.

"As container freight rates continued to reel under unconvincing demand through the month and most of what is the traditional peak season - usually marked by strong import volumes as retailers in the West place bulk orders ahead of the year-end festive season, Platts Container Rate Index or PCTRI00 - a weighted average of S&P Global Commodity Insights' key container rate assessments - was assessed on September 21 at $3,390.79/FEU, down 26.2 percent on the month and nearly 55 percent lower from $7,514.62/FEU on September 21, 2021."

Heading into October, shippers believe the weeklong break observed in China could exacerbate the downtrend in freight rates. "At some point in time, carriers are going to pull more services, omit more ports, and blank more sailing in a bid to try and halt this erosion," a market source told S&P. "But this will only speed up during October Golden Week holidays in China."

Southeast Asia to West Coast North America was assessed at $3,200/FEU on September 22, down $1,700 on the month and over $5,000 since the beginning of June. Southeast Asia to East Coast North America declined $1,100 over the course of the month to $7,500/FEU on September 22.

Even with falling spot rates carriers, operators are holding firm on their long-term contracts that now sit considerably higher than the short-term market, the report said.