Latest news from ‘forward indicator’ countries confirms a global downturn is underway and could be severe. The global information service, Container News, reported late November container freight volumes fell sharply out of India in November. Source: IndustryEdge
Contract rates from Mumbai to Rotterdam collapsed to USD2,300/TEU (twenty-foot equivalent unit), down from USD3,500/TEU just one month before.
However, this is just the tip of the iceberg.
West India to Singapore rates collapsed to USD50/TEU, falling 65% from the prior month, for instance. It was similar for West India to Shanghai, where rates fell toUSD150/TEU. Some of these are back shipments of course and that reduces rates automatically, but the declines are very steep and very fast, indicating Indian exporters are being asked to pay for little more than the container return cost.
India’s container rates are often ahead of the general movements – it supplies low-cost input goods to other manufacturing process – and it seems reasonable to assume there will be further reductions on other routes in coming months.
For those – like the IndustryEdge team – who are fascinated by international trade, the Incoterms published by the International Chamber of Commerce (ICC) are a deep fascination. The excellent table below shows a matrix of inclusions and responsibilities for the 11 Incoterms. It would be too small to show here so please click here to go to the original.
The China Consolidated Freight Index (CCFI) shows the cost of shipping finished goods from China around the world is now moderating.
Over 2021, the weighted average cost of containerised freight doubled. Since the start of 2022 the weighted average cost has declined 58%. The Australia/New Zealand route was 50% lower over the same period.
In late-November, the Baltic Dry Index (BDI), the main indices of raw materials shipping costs, was 38% lower than at the end of 2021, with the index showing the cost of bulk shipping is now barely above that recorded at the start of the global pandemic, now almost three years ago. Compared with a month earlier, the BDI was essentially stable.
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