The Drewry World Container Index falls 4% to $4,374 per 40-foot container, driven by increased capacity and softening demand.
Container freight hits the brakes: Global index falls by 4%
The Drewry World Container Index has decreased for the second consecutive week, dropping to $4,374 per 40-foot container. The increase in capacity on the Asia-Europe and Transpacific routes, along with a softening of demand, has pushed prices down. However, the current level does not indicate that the freight market has fully returned to normal.
The Drewry World Container Index fell by 4% in the week of July 23, reaching $4,374 per 40-foot container. This marks a decline for the second week in a row. The primary reason for the drop was identified as the weakening of spot freight rates on the Asia-Europe and Transpacific routes.
The Shanghai-Los Angeles freight rate decreased by 6% to $5,878, while the Shanghai-New York freight rate fell by 4% to $7,598. Drewry noted that the increase in capacity and the softening of demand on U.S. routes have altered the price balance between carriers and shippers.
On the Asia-Europe route, the Shanghai-Genoa freight rate dropped by 5% to $5,988, and the Shanghai-Rotterdam freight rate decreased by 1% to $4,824. Drewry expects limited declines in Asia-Europe prices in the coming week.
There was also a continued softening in intra-Asia container shipping. The Drewry Intra-Asia Container Index fell by 2% to $960. This marks the fifth consecutive weekly decline for the index. Prices on the Shanghai-Jawaharlal Nehru, Shanghai-Jakarta, and Shanghai-Kaohsiung routes decreased by 4%.
While the decline in container freight rates appears positive for importers and exporters, it is premature to interpret the two-week drop as a permanent normalization. The security crisis in the Strait of Hormuz and the Red Sea, the redirection of ships towards the Cape of Good Hope, war insurance, fuel surcharges, and uncertainties regarding U.S. tariffs could push costs back up.
Additionally, carriers reducing capacity through blank sailings could quickly halt the decline. The number of ships in the container market is only half of the equation; the other half is where and when the ships are withdrawn from service.
From Turkey's perspective, the decline in Shanghai-Genoa and Shanghai-Rotterdam prices is significant as it reflects the overall trend in the Europe-Mediterranean market. However, prices for Turkish ports may not move in tandem with the Drewry index due to factors such as transshipment ports, service structure, port surcharges, exchange rates, and the balance of empty containers.
Source: SeaNews Türkiye
