Two bearish indicators are Asia-US container shipping rate

Trans-Pacific cruise ship prices are higher at two bearish levels. It depends on the specific directions you believe, but according to Drewry, specific shipping prices are below their current level last year, and according to Xeneta, spot prices are at below current contract prices.

The numbers are now the same as last year

Drewry’s weekly survey was released on Friday, Shanghai-Los Angeles put prices at $ 7,952 for each of the same forty-foot area, down 7% year-over-year ( y/y). Drewry put the Shanghai-New York index at $ 10,403 for FEU, down 7% y/y.

That’s a big change from the previous week, when Drewry’s Shanghai-Los Angeles stock price continued to rise by 32% y/ya while Shanghai-New York stock prices rose by 33%.

It’s not because prices have fallen in the past week that prices have risen so much every week. Drewry’s trans-Pacific inspections pulled the most between mid-March and mid-April. The decline has been much slower since then.

But the main driver of the oy / y decline was a spike in prices this week last year, when Drewry’s Shanghai-Los Angeles and Shanghai-New York area estimates rose. 34% and 39% weekly respectively.

The week now marks the first time Drewry’s Global Composite Index has entered the red. It is now down to 10% y/y.

However, trans-Pacific prices are higher than pre-COVID levels. Drewry’s Shanghai-Los Angeles index was 5.7 times higher in the same week in 2019. The Shanghai-New York index was 4.3 times higher.

Countermeasures with contract fees

Xeneta includes data on contract prices and fixed rates. China-US West Coast prices have fallen below the agreed prices since June 4, according to Peter Sand, Xeneta’s chief analyst.

On Tuesday, Xeneta calculated the short-term average on the China-West Coast route at $ 7,768 for FEU, 3% below the long-term average of $ 7,981 for FEU.

Different indexes continue to undergo different price points (leading to some skepticism in the directions). Unlike Drewry, Xeneta did not notice the drop in numbers. It consistently shows an increase of 46.5%. But his data shows a 160% y / yi rise in long -term prices, leading to a flip in the relationship between the two.

According to Sand, “What we’ve seen over the past year is strong growth for both groups of pay, but real wins for the deals that have been agreed upon.

“That has led to the downturn between the two being reduced and, with supply chains breaking at the seams and customers looking to keep the problem as low as possible. , demand for stocks in this market has fallen slightly, lowering prices. “

According to Xeneta, China-West Coast area prices were higher at a high of $ 4,000 for FEU in September “before long-term prices rose to overdrive and divert the divergence. prices longer or lower since April, although local prices have fallen slowly from their highs in March.

The following problems are for marine carriers

Porters predicted a decrease in ay/y by the second half. Indeed, liner users Maersk, Hapag-Lloyd and Zim (NYSE: ZIM) expect the 2022 results to be much better than the 2021 record.

The reason: Differential prices and y/yi increased in the first half and the decline in oy/yi spot prices in the second half was offset by higher contract rates.

However, there are at least four problems with the bottom lines of carriers. If business conditions are better than expected, 2022 is likely to be the second best year in the history of the liner industry.

The first problem: The points, while pulling back, remained at high levels and did not fall. But as Vincent Clerc, Director of the Maersk marine division, said at a conference last year, “Because of the high levels. [in] Short -term payments can be made very quickly to a standard level. “

Second, carrier costs are rising. On Wednesday, the world’s largest carrier, MSC, said a significant increase for its India-US service would be needed on July 15 because “freight is not enough to meet prices. of this time. “

Third, more cargo fell than expected. It’s not possible to know how much of the holiday season and port bookings are, but FreightWaves SONAR’s index shows a decrease in the number of freight the U.S. has decided to leave. in May and the first month of June.

Map: FreightWaves SONAR’s Container Atlas

And fourth, the agreements used by carriers to protect space and low noise do not provide full protection.

Lars Jensen, Managing Director of Vespucci Maritime, said in a website post on Friday: “If the market doesn’t close quickly in the next week or two, we will start to see shippers return contracts. regarding the re -editing and / or exchange of books in the marketplace and not delivering the books in full agreement to the carriers. “

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