The World Container Index’s composite index, which is an average of spot freight rates on 11 global East-West routes connecting Asia, Europe and the US, has reached a record low of US$701 per 40-foot (ft) container, according to Drewry Shipping Consultants.
This backs Drewry’s recent prediction that East-West spot rates would continue to decline in 2016 on the back of intense volatility in 2015.
The record low was the lowest reading since the World Container Index started tracking weekly transatlantic, transpacific and Asia-Europe rates in June, 2011.
Global freight rates have plummeted as a result of the drop in demand for Chinese experts. This, coupled with overcapacity in the market, is causing turmoil for shipping companies and terminal operators, and rippling the entire supply chain.
Technical Paper: The Great Freight Mystery Explained
Currently, the index rate assessments for the Shanghai-Rotterdam and the Shanghai-Genoa routes fell to all-time lows of US$354 and US$341 per 40ft box, respectively, while the latest Shanghai-Los Angeles rate of $878 per 40ft container was marginally higher than the record low for that route.
Richard Heath, Director of WCI, said: “The World Container Index’s composite index is now 60% lower than the average of the past 5 years and has decreased by 62% in the past year.”
Technical Paper: Freight Expectations
Philip Damas, Director at Drewry, said: “Rate reductions are spreading across all routes, as the shipping market continues to soften.
“This is good news for shippers’ cost budgets, as the latest average index value of $701 per 40ft represents an expense of less than 10 cents per kilometre and makes products competitive even in remote markets.”
The World Container Index is the only weekly container pricing index which is independent of carriers and government authorities.