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Container freight rates weaken as demand starts to slip

Author:   Posttime:2022-07-14

THE increase in freight costs that began during the early stages of the Covid crisis is beginning to unwind, with rates from China to the US Pacific coast decreasing over the last couple months, reports London's Investors' Chronicle.

The cost of moving goods has been one of many inflation drivers of the past year.
Spot rates for shipping an FEU on this trade lane have fallen from US$15,255 at the end of April to $7,568 by July 1.
Rates are sliding at a time of year when they generally increase as the peak shipping season ensues.
Spot rates are nine per cent lower than they should be given typical seasonal patterns or about 15 per cent lower on transpacific routes, according to Vespucci Maritime CEO Lars Jensen.
"It is an indication that importers are "seeing a slowdown in consumer spending," he said.
Said Xeneta chief product officer Erik Devetak: "With peak season coming in the US, the expectations for retail sales are potentially not so good."
"The warehouses are full and we feel that a lot of customers have overstocked."
Braemar Shipping Services (BMS) analyst Jonathan Roach argued that the current weakness was the beginning of a correction.
"Consumer confidence in the US and Europe is already on the downward glide path and will continue as we go through to 2023," said Mr Roach.
The drop-off in Drewry's World Container Index has been at about 10 per cent.
Meanwhile, shipping lines are having to make upward adjustments to the annual contract rates they charge to account for higher fuel prices.

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