[Asia Economy Reporter Yoo Hyun-seok] Global container shipping rates have fallen for nine consecutive weeks. The freight index has dropped to the 3500 level.
According to the shipping industry on the 15th, the Shanghai Containerized Freight Index (SCFI), a global shipping freight indicator, recorded 3562.67 on the 12th, down 177.05 points from the previous week.
The SCFI surpassed 5100 for the first time in history last January. However, it declined for 17 consecutive weeks. After rebounding on May 20, it continued to rise until June 10. But it has fallen again for nine consecutive weeks. It has dropped to the lowest level in one year and three months since May 28 of last year.
Specifically, it declined on seven routes including the South America route. The Europe route fell by $195 to $4,971 per 1 TEU. The Mediterranean route recorded $5,633, down $219. The Middle East route dropped $229 to $2,372.
The Australia-New Zealand route also fell by $86 to $2,902, and the South America route recorded $9,214, down $317. Additionally, the West Coast of America route freight rate was $6,153 per 1 FEU (12-meter container), down $346, and the East Coast route fell by $224 to $9,106.
This decline in shipping rates is largely attributed to recent global inflation. As a result, cargo demand has decreased, compounded by an economic recession. The decrease in cargo volume is pointed out as the background for the weak freight rates. Researcher Eom Kyung-ah of Shin Young Securities explained, "The reason SCFI is falling daily is that the increase in market participants is causing freight rate quotes to decline," adding, "It is a peculiar situation where increased market participants compared to before are causing port congestion, freight rate declines, and earnings reductions simultaneously."
Further declines in freight rates are also expected. Researcher Choi Gu-woon of Korea Investment & Securities explained, "Considering the demand slowdown due to inflationary burdens, weakness is expected in the second half of the year as well."
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