Sea freight rates dropped sharply with long distance shipping routes. For the domestic market, freight rates are reduced by about 15-20%.

Rates reversed after 2 years of sharp increase

According to maritime market research platform Drewry, the global composite container index has fallen for the 28th consecutive week and is now down 47% year-on-year.

Accordingly, the latest Drewry WCI composite index is $5,379 per 40-foot container, currently 48 percent below the peak of $10,377 reached in September 2021. However, this price is still 46 percent higher than the five-year average of $3,679.

The container shipping market has begun to correct after a strong two-year bull cycle, with both spot rates and charter rates falling.

With international shipping routes, according to a shipping business, freight rates have decreased by about 40-50% for long-distance shipping routes. Specifically, the freight from Vietnam to the US will be about 15,000 USD-17,000 USD/40 feet container,. but currently it is only about 11,000 USD.

The domestic transport market fell lower, about 15-20%. According to the survey, the price has decreased by millions of dong for each domestic shipping container from Hai Phong - Ho Chi Minh City and vice versa.

Specifically, the one-way freight rate from Hai Phong -Ho Chi Minh City is fluctuating about 9.2 million 9.5 million VND/20ft container and about 12 million VND/40ft container. In the opposite direction from Ho Chi Minh City to Hai Phong, the freight rate is about 6 million - 8 million VND/20ft containers and 9 million-10 million VND/40ft containers.

This price has decreased by about 1-2 million VND/way compared to the time when businesses listed the freight rates in April 2022.

What is the cause?

The reason is believed to be that Chinese factories have resumed operations, so the demand for imports has decreased, as well as the congestion at seaports has been released, so the number of ships transported more, affecting the market.

According to experts, in the coming time, there will be more new container ships on the market. This could also affect freight rates, as well as the charter market.

"After Covid-19, market movements were constantly changing. Currently, the time charter market is also decreasing, so from now until the end of the year, the market forecast is quite bad. However, the current freight rates are still higher than the rates before the Covid-19 epidemic", Mr. Tien shared and added that the quantity of goods is showing signs of decreasing and the freight rates have increased dramatically over the past time. Currently, the price level is gradually returning to its true value.

Meanwhile, according to SSI's forecast, the correction of the container shipping market took place earlier than expected due to the sudden rapid weakening of demand, not the ease of congestion.

At the same time, rising inflation amid a bleak growth outlook could have a significant impact on global consumer demand, and affect freight activity. Container freight rates will gradually return to normal, but the normalization process will depend heavily on supply chain bottlenecks, which are estimated not to be overcome until the second half of 2023.

Source: Aloha International Logictics