SIMIC

FREIGHT rates on the Europe to Asia trades have begun to follow the wider container market down after a period of resistance.
According to a market update from freight rate benchmarking firm Xeneta, spot and long-term freight rates are beginning to fall after a sustained drop in volumes, according to UK's Seatrade Maritime News.
Leading fronthaul reefer route spot rates now sat at US$4,240 per FEU as of January 23, after holding above $5,000 per reefer for almost two years. Spot rates have dipped below contract rates for the first time since 2019, after a sharp fall in December, said Xeneta.
In comparison, long-term rates were just under $4,500, down from a September 2022 peak of $4,850 per FEU.
"Spot rates falling below long-term contracts is a classic sign of a weak market," said Peter Sand, chief analyst, Xeneta. "This is one of the world's busiest reefer routes, with a strong- rates track record, but even it is not impervious to the forces impacting on containerized freight at present.
"What we're seeing is a prolonged decline in demand/volumes, especially to China, and that - in addition to easing supply chain congestion and available equipment and capacity - is translating to falling prices. We saw spot rates fall below long-term contracts on the main 'dry' trades back in August, and it looks like the refrigerated segment is now playing catch up. The surprise is arguably that the prices stayed so high for so long."
Reefer volumes from Europe to Asia have been in decline since 2020, down 4 per cent in 2021 and down 13 per cent in 2022, equivalent to a 100,000 TEU loss in demand from January to November 2022.
"Softening demand from China is the culprit here. Over the 11-month period we actually witnessed a year-on-year fall in demand of 30 per cent to China, equivalent to 115,000 TEU. The only reason the overall loss to the Far East was less than this is that demand into North Asia and Southeast Asia actually grew, by 7.2 per cent and 2.6 per cent respectively. These shifts saw China's overall share of the reefer business on the corridor fall from 51 per cent in 2021 to 41 per cent last year. Time will tell if this trend continues," said Mr Sand.