Something Just Snapped: Container Freight Rates From Asia To Europe Crash 23% In One Week

Tyler Durden's picture




 

One of the few silver linings surrounding the hard-landing Chinese economy in recent weeks has been the surprising resilience and strength of the Baltic Dry Index: even as Chinese commodity demand has cratered in 2015, this "index" has more than doubled in the past few months from all time lows, and at last check was hovering just over 1,100.

 

Many were wondering how it was possible that with accelerating deterioration across all Chinese asset classes, not to mention the bursting of various asset bubbles, could global shippers demand increasingly higher freight rates, an indication of either a tight transportation market or a jump in commodity demand, neither of which seemed credible.

We may have the answer.

It appears that the recent spike in shipping rates was analogous to the dead cat bounce in crude oil prices: a speculator-driven anticipation for a sustainable rebound that never took place. And now, just like with crude prices, it is all crashing down.... again.

According to Reuters, shipping freight rates for transporting containers from ports in Asia to Northern Europe dropped 22.8 per cent to $400 per 20-foot container (TEU) in the week ended last Friday, data from the Shanghai Containerized Freight Index showed.

Freight rates on the world’s busiest shipping route have tanked this year due to overcapacity in available vessels and sluggish demand for transported goods. Rates generally deemed profitable for shipping companies on the route are at about US$800-US$1,000 per TEU. In other words, at current prices shippers are losing half a dollar on every booked contractual dollar at current rates.

According to Shanghai data, it was the third consecutive week of falling freight rates on the world’s busiest route. Container freight rates have so far increased in 5 weeks this year but fallen in 23 weeks.

In the week to Friday, container freight rates fell 24 percent from Asia to ports in the Mediterranean, fell 4.4 per cent to ports on the US West Coast and were down 3.7 per cent to ports on the US East Coast.

Maersk Line, the global market leader with more than 600 vessels and part of Danish oil and shipping group AP Moller-Maersk, was one of the few container shipping companies to make a profit last year. The company controls around one fifth of all transported containers from Asia to Europe.

Should the dead cat bounce in shipping rates indeed be over, and if the accelerate slide continues at the current pace, not only will shippers mothball key transit lanes, but the biggest concern for global economy, the unprecedented slowdown in world trade volumes, which we flagged a week ago, will be not only confirmed but is likely to unleash yet another global recession.

Unless, of course, central planners learn how to print trade and quite soon at that...

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Sun, 08/02/2015 - 18:57 | 6382855 davidalan1
davidalan1's picture

YIKES.....desparate times require desparate measures...Lets see, we were charging 100 bucks now just 76... anyone need moar stuff?

Sun, 08/02/2015 - 19:06 | 6382876 johngaltfla
johngaltfla's picture

Bullish.

Shit.

I can't even type that with a straight face.

Sun, 08/02/2015 - 19:09 | 6382881 Publicus
Publicus's picture

Technology is lowering the cost of transportation!

Sun, 08/02/2015 - 19:17 | 6382911 davidalan1
davidalan1's picture

With fuel costs being the seemingly biggest cost and half of what it was a year or so ago...this doesnt bode well....

So i run a trucking company in the  U.S. and my biggest cost (fuel) is half of what it was a year or so ago and Im driopping

my Frieght rates 20 plus percent?  IM FUCKED FOR SURE...

Sun, 08/02/2015 - 19:19 | 6382919 remain calm
remain calm's picture

No problem, just turn world wide QE on Max setting, that will fix

Sun, 08/02/2015 - 19:45 | 6383002 Arnold
Arnold's picture

Bullish scrap yards.

You Know they are tight enough to pull a real profit.

 

http://www.dailymail.co.uk/news/article-2324339/Worlds-biggest-ship-grav...

Sun, 08/02/2015 - 20:02 | 6383061 ThroxxOfVron
ThroxxOfVron's picture

"Bullish scrap yards. "

 

I foresee a lot of ships and containers sunk in certain shallow reefs, covered in sand and cement, evntually to be sold as luxury islands to rich Chinese...

Sun, 08/02/2015 - 20:17 | 6383094 knukles
knukles's picture

It's all because of them electric cars, silly!

Sun, 08/02/2015 - 20:31 | 6383136 Arnold
Arnold's picture

Just because the Commie chinks can do it doesn't mean that we can.

 

(gimme a coupla days to research a spot for a powerpoint present.)

Sun, 08/02/2015 - 21:19 | 6383250 Sages wife
Sages wife's picture

Don't BTFD you fucking idiot?

Sun, 08/02/2015 - 21:22 | 6383262 Arnold
Sun, 08/02/2015 - 21:48 | 6383339 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

So 'merican consumer still good, right? Mmmhmm, sounds like time to BTFATH!!!

Sun, 08/02/2015 - 23:33 | 6383621 TBT or not TBT
TBT or not TBT's picture

Hang on, is this good news or bad news.  I mean, on ZH we half want the end time financial singularity to come, and now that it looks pretty good for next month, that's bad.    And here the El Nino is supposed to dump continuous epic powder at Tahoe this winter.   

Sun, 08/02/2015 - 21:51 | 6383350 38BWD22
38BWD22's picture

 

 

$400 / TEU is MUCH lower than we are paying W Pacific ports to Callao, Peru.

How do you find out container rates online?

Mon, 08/03/2015 - 00:34 | 6383727 Paveway IV
Paveway IV's picture

This is specific for China to Mediterranean rates. No reason for Peruvian rates to nosedive. Take a look at the economic powerhouses in and around the Mediterranean today. Any wonder why Chinese exports TO that area are plummeting? I really don't see much of interest here - this is just a continuation of trends over the last couple of years.

On-line rates are hit-and-miss. Bimco has a nice chart:

https://www.bimco.org/Reports/Market_Analysis/2015/0615_ContainerSMOO201...

Still, rates to Peru must have dropped a bit from - say a year or two ago for you, right?

Mon, 08/03/2015 - 01:12 | 6383804 38BWD22
38BWD22's picture

 

 

Thank you!

Re rates for us, almost all of our cargo is LCL, but with containerload pricing, I would be able to calculate expected ocean freight even so.

I would have to check with our people there in Lima to know if rates are lower to Peru than before.  Your comment re China - Med rates seem logical.

 

EDIT: I would guess that the US West Coast trend would be most like ours.

Mon, 08/03/2015 - 06:01 | 6384093 zhandax
zhandax's picture

Fell 23% to Europe and fell 4.4% to LA.  This seems to say more about Europe than about shipping rates.

Mon, 08/03/2015 - 07:44 | 6384218 gatorengineer
gatorengineer's picture

We are still paying $7500 / container Osaka to West Coast Port.  Same as its always been.

Sun, 08/02/2015 - 23:04 | 6383545 StychoKiller
StychoKiller's picture

Crank it up to 11!

Sun, 08/02/2015 - 19:18 | 6382916 onewayticket2
onewayticket2's picture

Greece.

No ticky. No laundry.

Sun, 08/02/2015 - 19:11 | 6382890 ThrowAwayYourTV
ThrowAwayYourTV's picture

I don't need more stuff. I'm tired of bending down and picking shit up everytime I turn a corner or walk thru a doorway.

I just need to convince the wiff that the lust for stuff is wrong and I am right.

Wish me luck!

 

Sun, 08/02/2015 - 19:30 | 6382950 NoPension
NoPension's picture

My wife changed out the rug in the living room four times last week. Back and forth to the store. Up and down the stairs to grab new shit that hasn't even been used. She's nuts. But I try to let it go.
Rearranging deck chairs on the Titanic is a good analogy. I try to explain what is going on, she just doesn't get it. ( big fan of The Bachlorette).
32 years into this. We should both win a prize.

Sun, 08/02/2015 - 19:51 | 6383027 Miffed Microbio...
Miffed Microbiologist's picture

Ok, I am trying to come up with something of value to say that would help you but I have drawn a blank. I can't imagine what you must be going through to live with such a vacuous person. Hopefully she makes up for this in other ways.

I finally replaced my bathroom rug when all of the rubber backing had worn off and I slipped on it so badly I damn near landed on my butt. My solution? Ask Mr when he was going to Costco to pick up another. What color do you want? Nothing bright and garish. The sky blue one he picked out is fine. I hate shopping. That part of society digging for deals like locusts leaving destruction in their wake disturbs me. I can tell it gives them a strange high just looking at their eyes.

Maybe I should watch that show Bachelorette to get a better understanding because I don't know what that is. But lacking a TV would make that difficult. You have my condolences and admiration. I would be unable to live the life you are leading and I hope you don't drink yourself to death.

Miffed

Sun, 08/02/2015 - 20:47 | 6383171 Money Counterfeiter
Money Counterfeiter's picture

The younger you are the more brain cells in head #2.

Sun, 08/02/2015 - 21:13 | 6383240 RafterManFMJ
RafterManFMJ's picture
“We buy things we don't need with money we don't have to impress people we don't like.”

 Dave Ramsey

*Full disclosure, RafterMan bought a new bike 2 weeks ago. Because fun.

Sun, 08/02/2015 - 22:15 | 6383419 e_goldstein
e_goldstein's picture

Pretty sure Palahniuk said it first, but yeah.

Sun, 08/02/2015 - 22:47 | 6383496 NoPension
NoPension's picture

Thanks, Miffed.
The only son is turning thirty in a week. And moving across country, in two weeks. He just got a new job. He is very secure in his employment. He could easily get another job close to home, if he wants or needs to. We will leave it at that!
So wifey is throwing a party. And she is obsessed. I DO MEAN OBSESSED! So the honey do list, on my only day of the week at home, caused some fraying of the nerves today. I'm being polite. I would not have been surprised if the neighbors got an earfull. No, they heard me, no doubt.
I can usually just let it slide off, like water off a duck's ass. I am a combat veteran. But there are those days. This was one.

Ahhh....I feel better. Thanks for letting me share.

Mon, 08/03/2015 - 08:15 | 6384290 sleigher
sleigher's picture

Reading your post and Miffed's reply makes me think of my own life.  I married a woman more like miffed than not.  I divorced a woman more like your wife than miffed.  Noticing the transformation was difficult as it was very slow.   Oh well, people change I guess.

Mon, 08/03/2015 - 13:06 | 6385499 Miffed Microbio...
Miffed Microbiologist's picture

It sounds like your wife is throwing a party that she would want without consulting your son's wishes. I can't imagine a 30 year old man would care much about a rug. It seems to me the solution would be for both of you to agree to ask your son what he would like to do for his party. But seeing the dynamics going on, this probably wouldn't work and conflict would just increase. I guess some situations have no resolutions.

You as a retired veteran have lived life in the raw and have come home alive. This will make you look at life differently. Sometimes I wish there were a way women could experience life as you did and then appreciate the world they have now. If I were a marital counselor, I'd send the women to Maturation Island for a month where they would try to survive on their own. I think this would solve impulsive rug purchasing. Can't think of anyone that would pay for my services tho...

You will be in my thoughts and prayers.

Good Luck.

Miffed;-)

Mon, 08/03/2015 - 15:22 | 6386154 mkkby
mkkby's picture

Obsessing over rugs and parties indicates deeper issues.  There may be some undiagnosed OCD.  The solution for no pension is to control his woman.  If she's not a responsible, mature person on her own -- take away the check books and credit cards and put her on a budget.

Despite feminism's claims otherwise, women want a strong man to lead them.  If you don't provide that leadership they lose respect for you and have these bursts of crazy.

Sun, 08/02/2015 - 20:05 | 6383067 ThroxxOfVron
ThroxxOfVron's picture

Borrow a bicycle.

At your age it's faster than running away.

Sun, 08/02/2015 - 20:35 | 6383145 Winston Churchill
Winston Churchill's picture

You get out after 10 years in a lot of states.Manslaughter that is.

Mon, 08/03/2015 - 00:13 | 6383688 Yen Cross
Yen Cross's picture

Inverse Bonds. MIA?

Mon, 08/03/2015 - 06:54 | 6384151 Winston Churchill
Winston Churchill's picture

Tried, and couldn't get ZH chat to open.Adblocker or a filter stopping it.

Sun, 08/02/2015 - 21:15 | 6383244 kareninca
kareninca's picture

NoPension, you should just be glad that your wife is easily amused by pointless moronic stuff.  Having an aware spouse is not entirely a plus.  Having a cheerful spouse is a truly enviable thing.  But I think you know that already.

Sun, 08/02/2015 - 23:17 | 6383584 dogbreath
dogbreath's picture

Man are you stupid.  His wife is a narcissistic cunt like you.

Mon, 08/03/2015 - 01:14 | 6383811 kareninca
kareninca's picture

You're back, dogbreath!!!!!!  Lurking all this time, and now you spring out to attack!!!!!

You are really obsessed with me, LOL. 

Mon, 08/03/2015 - 08:50 | 6384377 dogbreath
dogbreath's picture

Obsessed??  hardly.  Its just that you are such an amazingly stupid twat.  But you are my favorite self cleaning blow up doll.  How's that diet working for you.

Mon, 08/03/2015 - 07:28 | 6384191 stocktivity
stocktivity's picture

...and I thought I was alone in having a crazy wife

Sun, 08/02/2015 - 19:36 | 6382971 Supernova Born
Supernova Born's picture

I think you are in need of an EZ Reacher.

Your days of bending over to pick up crap will soon be over.

Mon, 08/03/2015 - 05:14 | 6384047 Alvin Fernald
Alvin Fernald's picture

Concerning an EZ Reacher reminds me of Gran Torino.
https://youtu.be/xRVuU9jWbqU

Sun, 08/02/2015 - 20:08 | 6383074 NoDebt
NoDebt's picture

Would you might videotaping that conversation with the wife and posting it up?  I should have recorded mine- it was hysterical.  Like I asked her to cut off her right arm or something.  First thing she wanted to know was whether I had just lost my job (which would be pretty amazing since I'm self-employed).  It didn't get any better from there out.

Sun, 08/02/2015 - 21:28 | 6383275 RafterManFMJ
RafterManFMJ's picture

I came close to firing myself a few times; but I've always managed to talk myself into higher performance.  Still, the knowledge that I don't consider myself indispensable to my ongoing operations keeps me slogging away.  I don't want to look myself in the eyes, and tell myself that I have to let myself go.

Mon, 08/03/2015 - 09:25 | 6384476 explosivo
explosivo's picture

You take it too serious, Rafterman. It's just business. 

Mon, 08/03/2015 - 09:45 | 6384536 clade7
clade7's picture

 

You think you got it rough Rafterman?  I get fired nearly every afternoon for drinking on the job!

But every morning I am in the office early, making a pot of coffee and getting the day started, every damn day my boss makes me light his cigarette, clean his glasses, blow his nose and wipe his ass, sometimes he pulls up the SI body paint photos and makes me jack him off too!...

Its no wonder I drink on the job, working for such a dipshit...I wish I could get away from this damn guy, he pays well though, even buys me beer!  And I'm familiar with his quirks and do my best to cover for him and overlook his faults..going on 56yrs now I have to deal with this guy...

I'm self employed   

Sun, 08/02/2015 - 20:46 | 6383166 Ms No
Ms No's picture

I hear lyme disolves bodies more quickly. 

Just kidding, of course.

Sun, 08/02/2015 - 21:36 | 6383299 Miffed Microbio...
Miffed Microbiologist's picture

Hey, I think Ebola is the clear winner in this category. Filoviridae whups Borrelia's ass!

Ok, gotta cut back on the Percocet.

Mon, 08/03/2015 - 08:04 | 6384265 Tall Tom
Tall Tom's picture

Borrelia...Think of it like Cancer...withut the benefit of Hemmoragic Death.

 

Borrelia whips my ass. And I refuse to use any of that Hydrocodone...Or is that Percocet an Oxycodone?

 

Now just where did I put that Sodium Hydroxide for Ms. No?

 

I think that is what she is looking for.

Sun, 08/02/2015 - 19:50 | 6383022 ajax
ajax's picture

 

 

Yeah right, "moar stuff".

My sister used to 'clean' that shit in the Pacific Northwest before the "crash"; you know, the millions of Asian cars imported to the USA via the West Coast, The insects my sister saw every day coming off those containers would make you faint, vomit. I told her to take them to the Western Washington State labs straight away. You have no idea what "cheap stuff" really means: for indigenous forests, fields, etc. No, really. It has gone too far.

Sun, 08/02/2015 - 21:26 | 6383269 Arnold
Arnold's picture

From the dead 'Chinese Imports' you mean?

Do NOT follow this link or you will be banned from the site!