Freight Goes to Heck, Now Even in the US…”Global recession watch: the cleanest dirty shirt gets dirtier.”
by Wolf Richter
WolfStreet.com
September 14, 2015
The Dow Jones Transportation index has been warning us: by August 25, it was down 19% year-to-date before bouncing. It’s now off 13%. Not all is well in the transportation sector – and by extension in the global economy.
The World Trade Monitor, when I last wrote about it on July 22, painted a very un-rosy picture of global trade by having dropped the most since the Financial Crisis.
In granular detail, the weekly China Containerized Freight Index (CCFI) fell to 820.91 on Friday, hobbling along near its multiyear low set in June. It tracks contractual rates and spot rates for shipping containers from major Chinese ports to major ports around the world. It’s 22% below where it was in February and 18% below where it had been in 1998, when it was set at 1,000!
Spot rates from Shanghai to the US West Coast per 40-foot container equivalent unit (FEU) are down 33.4% from a year ago, according to the Shanghai Containerized Freight Index (SCFI); spot rates from Shanghai to the US East Coast are down 41%.The Drewry Container Freight spot rate from Hong Kong to Los Angeles is down 38%. That’s the east-bound trade, where rates had been collapsing all year.
Westbound rates had been holding up. For example, rates from Rotterdam to Shanghai, which tracks the cost of shipping exports from Europe to China, as measured by the weekly World Container Index (WCI), had been hanging in there all year, even if at relatively low levels ranging from $750 to $870 per FEU, according to JOC’s market data. But after August 20, when it still stood at $869 per FEU, it started plunging. By September 10, it hit $611, down 30% in three weeks.
The beaten-down shipping rates are the result of an oversupply of container ships and weak global demand for manufactured goods.
The Rest…HERE
