China-bound Shipping Rates Plummet into Negative Territory for Back Hauls

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Credit: Container News

Carriers are paying their customers to move freight from North and South Europe, the Middle East and other backhaul trades, according to Arcon Containers.

Arcon Containers

Arcon Containers is a tech company looking to improve supply chain efficiency and is part of the Saksham Group based in Mumbai, the group president, Supal Shah, speaking at Container xChange’s Digital Container Summit in Hamburg yesterday, said that all the carriers are effectively paying to transport cargo.

“Containers can be booked from Hamburg to Shanghai for $80 per box, from India and the Middle East it’s $5 per container, but that includes the THC [terminal handling charge] which is around $250 a box, so they [the lines] pay [between $170 and $245] to evacuate their equipment to Asia,” explained Shah.

Shipping Industry Outlook

Global demand has dropped considerably this year with Drewry Shipping Consultant’s John Fossey, on the same platform as Shah explaining that, “The world fleet is growing faster than demand”.

According to Fossey, capacity will see a 5% increase this year, with negligible demand growth of 0.3% putting rates under continued pressure this year, which is expected to continue in the coming years.

Impact of Congestion

  • Drewry’s forecasts indicate that demand for shipping is expected to recover to 2.6% in 2024 and further to 2.9% in 2025.
  • In contrast to the expected recovery, the year 2022 is projected to see only a modest growth in demand, with an increase of 0.5%.
  • Between 2020 and 2022, the effective capacity of the shipping industry was reduced by 7% due to congestion in ports and landside infrastructure in various trade routes.

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Source: Container News