Container spot freight rates witnessed their steepest fall since the start of the pandemic this week as the Shanghai Containerized Freight Index plunged by more than 8%, losing 275 points over the week. The sharpest decline on the main east-west trades was on the Asia-US west coast transpacific route, which saw rates dip by $648 per feu, or 11.2%, to $5,134 per teu, taking rates down to a level not seen since last July. The Asia-US east coast trade was firmer, as congestion continues to affect ports on the eastern seaboard, but still fell 2.1% to $8,801 per feu. Volumes destined for Europe also saw lower rates, with the Asia-northern Europe leg and Asia-Mediterranean both falling by over 7% to $4,441 per teu and $5,071 per teu, respectively. The SCFI comprehensive index has now dropped by almost 40% since it peaked in January, and other indices show similar fortunes for freight rates. Except for a small and brief uptick at the beginning of June, the index has fallen in every week since the first week of January.

The slide in spot rates across the board comes at a time when rates are normally at their highest as shippers push to get slots for peak season cargoes. But as Lloyd’s List reported earlier this week, declining spot rates on transpacific trade have yet to find the floor, with the lowest price reported to be at $3,700 per feu on routes to the US west coast. Data from Shifl also shows that the freight rate from China to the US west coast is set to fall below the $5,000 per feu mark for the first time since the pandemic-driven price hike. It expects the China-US west coast rate to fall to $4,900 per feu on average in September, a fall of 72% from a high of $17,500 per feu in September 2021. “While spot rates continue to decline, they are still more than three times higher than they were prior to the pandemic,” said Shifl chief executive Shabsie Levy. “The rates are at levels far lower than at the beginning of 2022, when consumer demand was very high. The pace of this continued decline points to the market returning to some semblance of the new normal.”

Xeneta chief analyst Peter Sand warned that this year’s peak season was likely to be “different this time around. Right now, the market is full of uncertainty. Not only is there the geopolitics, but there is also the global economic situation. There is a question over where volumes are heading.”

Analysts at Maritime Strategies International also warned that the peak season this year was likely to be a flat affair. “Overall, it is now clear that the industry’s traditional peak season and the port congestion in China, Europe and the US east coast are not enough to increase freight rates or even keep them at their still abnormally high current levels,” MSI said. “The significant downward risks on the demand side will keep pushing spot freight rates on the main lane head hauls further down in the coming weeks.”