Global Trade Just Snapped: Container Freight Rates Plummet 70% In 3 Weeks

Tyler Durden's picture

"This market is looking like a disaster and the rates are a reflection of that," warns one of the world's largest shipbrokers, but while The Baltic Dry Freight Index gets all the headlines - having collapsed to all-time record lows this week - it is the spefics below that headline that are truly terrifying. At a time of typical seasonal strength for freight and thus global trade around the world, Reuters reports that spot rates for transporting containers from Asia to Northern Europe have crashed a stunning 70% in the last 3 weeks alone. This almost unprecedented divergence from seasonality has only occurred at this scale once before... 2008! "It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term."

Baltic Dry at record lows...


And Shanghai Containerized Freight collapsing...


As Reuters reports,

Shipping freight rates for transporting containers from ports in Asia to Northern Europe plunged by 27.9 percent to $295 per 20-foot container (TEU) in the week ending on Friday, one source with access to data from the Shanghai Containerized Freight Index told Reuters.


The drop came after spot freight rates on the world’s busiest route dropped 39.3 percent last week, and the current rates are widely seen as loss-making levels for container shipping companies.


The spot freight rates for transporting containers, carrying anything from flat-screen TVs to sportswear from Asia to Northern Europe, has fallen 70 percent in three weeks.


In the week to Friday, container freight rates fell 22.5 percent from Asia to ports in the Mediterranean, dropped 8.6 percent to ports on the U.S. West Coast and were down 8.0 percent to ports on the U.S. East Coast.

But even more concerning is this collapse is occurring just as the containerized freight industry enters its golden seasonal period...


Now where have we seen this massive unprecedented decoupling before?


Of course the clarion calls of the status quo, everything is awesome, optimists is that this has nothing to with demand but is merely due to over-supply of ships...

Supply has indeed surged...

Source: @M_McDonough

But only thanks to totally manipulated and decoupled-from-reality signals from 'markets' that caused firms to massively mal-invest in building ships for the renaissance of global trade... which never happened...


In fact, as the chart above shows, growth in global trade has been slowing down for some time, as Acting-Man's Pater Tenebrarum notes,

But somewhere between collapsing oil prices, dollar strength, and consumer lethargy the economy’s narrative has drifted off plot.  The theme has transitioned from one of renewed growth and recovery to one of recurring sickness and stagnation.  Mass malinvestments in U.S. shale oil, Brazilian mines, and Chinese factories and real estate must be reckoned with.


Price adjustments, bankruptcies, and debt restructuring must be painfully worked through like a strawberry picker hunkered over a seemingly endless furrow row of over ripening fruits.  Sore backs, burnt necks, and tender fingers are what the over-all economy has in front of it.  The U.S. economy is not immune to the global disorder after all.

More evidence is revealed each week that the unexpected is happening.  Instead of economic strength and robust growth, economic fundamentals are breaking down.  Manufacturing is slowing.  Consumer spending is soft.  For additional edification, just look at copper, iron ore, or aluminum...

Charts: Bloomberg

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besnook's picture

bah! humbug! christmas past is delusion. christmas future is syrup. it is really, really going to be a sour christmas and a shortage of coal winter.

max2205's picture

I guess retailers finished stocking up last week for the remainder of the year 

Anonymous User's picture
Anonymous User (not verified) Winston Churchill Nov 21, 2015 3:26 PM

I see a new business opportunity: Ditch the cruise ships and take a Freight ship.

Now just to find a catchy name and build an app for it.  



PS yeah, no porn link this time. I know it sucks. 

Global Hunter's picture

No it doesn't suck, this is better.

Tarzan's picture

LOOK AWAY, there's nothing to see here, the economy is splendid,

did you see the DOW this week? 

Oil prices are low because the supply is out of control, those damn Saudis.....

Has nothing to do with plummeting demand....

Automatic Choke's picture

dat's 'cause everybody is trading amazon gift cards this year.

SoilMyselfRotten's picture

Better get moving if we're going to have war before it all burns down

Crisismode's picture



"nearly everything is screaming massive deflation"



Exactly WHAT PLANET are you living on????????????????

Have you really CHECKED OUT what has been happening to the price of food these past months?


And Pharmaceuticals????


And Healthcare???


And College Tuitions???


Are you a  Complete Fucking Idiot???




Arnold's picture

'Normally' I don't endorse screaming, in this case I do.

hxc's picture

Seasonally adjusted :)

glenlloyd's picture

Make that double seasonally adjusted and you've got a deal...

NidStyles's picture

The next boom will be in fired munitions being traded. 

Freddie's picture

Has anyone here gone shopping lately?   I went to Target the other day.  I used to like the store but it started really going to shit after everyone's credit crds got stolen by hackers who nailed Target.

I now hate Target because Gov. Mark Dayton (D) of MN told the AMERICAN citiens of MN that if they do not like being flooded by vile Somalis and other illegal alien invaders that they should leave MN. 
Dayton's family aka Dayton-Hudson are the majority shareholders in shitbag Target.

This MF'er Dayton - D (MN) deserves to get what Mussolini got.

Thanks to Obola inflation and endless money printing, the price of clothing there is laughable.  Targets earnings have been shit and I hope they die with KMart.

maxamus's picture

Target's last earnings were GOOD and they raised forward guidance UP.

Tarzan's picture

"Has anyone here gone shopping lately?"

The wife and I had Chili last night, got the ground beef "on sale" at over $4 per pound!  See the Bundy Ranch Stand-off for how our Government is treating our beef producers...

Have you seen the price of a freaking turkey Or eggs?  Bird Flue they say.... 

How about Pork?  Porcine Epidemic Diarrhea virus...

On and On, it's all Government Manufactured inflation if you ask me!

GubbermintWorker's picture

$4 a pound for ground beef? It was on sale, huh?

two hoots's picture

Just wait until TPP kicks in and they start selling US beef all over the globe....then check your beef prices?  

From Tom Vilsack, US Agri Sec:

"The pact would help American beef producers and others tap into a growing population of Asian consumers who are demanding high-end, safe food products, Vilsack said (in Toyko)." (Financial Post)

PT's picture

Bargains, bargains, everywhere!  And yet I still can't afford to buy anything, dammit!  Whatever went wrong?

Freddie's picture

I think almost everyone across the board is getting squeezed.  Many of the stores I go into are empty and I walk out with nothing.  I do not spend all my time doing that but once and a while I might go into a store.  The prices on so many things are insane.  A small tin of Kiwi shoe polish is between $5.99 and $7.99!  Endless other examples as well.

Meanwhile, assuming someone even has a job, wages have been stagnant or dropping for the past 15 years.



Arnold's picture

I have recently bought Kiwi black and brown and have put them with my Mink Oil.

I cannot document their cost, but i know that it is a lifetime supply.

glenlloyd's picture

I've noticed recently that there isn't a car battery under $100 anymore, and most seem to be $150 and above, at least in the local market, which you would think would be more competitive since a 'battery store' seems to have cropped up on every corner.

Do people really go to the battery store?

LouRukeyser's picture

(Actually i went recently and bought a $20 (maybe it was 18 bucks) Duracell auxiliary battery that would have cost me $100 at the Mercedes dealer.)  

maxamus's picture

Plenty of car batteries for about $75 to be had at Advance Auto and you can always get 40% off coupons to make them under $50.


That said, the one big change is a lot of car batteries that used to have 4 to 5 year warranties now have 90 days to 2 years warranty, and they do fail faster.

uhland62's picture

Don't say 'damn Saudis' - they are friends and allies. That's the new paradigm of friendship!!!

It's all very well to talk about containers, but has anyone taken into consideration that there are now two freight railway services from China through Russia to Northern Europe? That's not two services, two railway lines for freight services. One goes to Hamburg. Whatever they transport there now should be taken into consideration. It can be helpful sometimes to look in other places than the MSM, look 'beyond the headlines' or you get a screwed picture, a skewed view or some such like. 

11b40's picture

You do seem to have sucking on your mind frequently.

Anonymous User's picture
Anonymous User (not verified) 11b40 Nov 22, 2015 9:28 AM

Talking about sucking, here's something hard to digest:



cossack55's picture

If you cannot find porn on the internet, you will never be hired by the SEC.

Arnold's picture


cheech_wizard's picture

and many, many more...

Q: How much does it cost to travel by freighter?
The cost of cruising on a freighter averages around $100 per person per day including meals (some ships are more and some less).  Traveling alone isn’t much more expensive than traveling with a companion.


SoilMyselfRotten's picture

But it will suck when  they make you put your Pina Colada down, put a mop in your hand and make you swab the deck

tomspoerner's picture

Put a swimming somewhere in the middle of that freight ship and you got a deal!

Dragon HAwk's picture

Park those container ships offshore, convert the cans to mini apartments, and collect rent  who says you can't make money while your at anchor...

stant's picture

Helicopter $ coming monday

o r c k's picture

If It's not 10 grand it won't help.

Arnold's picture

I'm thinking that they wouldn't miss $322,327,914 million very long.


( that'll inflation the bitches)

DeadFred's picture

XAU and XAG liftoff soon.

freewolf7's picture

I am immune to that phrase.

Arnold's picture

That is microagressive.

seek's picture

Nope, at least not in USD terms. Much as I wish you were right, nearly everything is screaming massive deflation. The asset classes that aren't deflating are pretty much just investment-specific classes (rather than economy-specific like ores, etc) that had QE dumped on them -- and QE is gone, so they're starting to turn as well.

In the meantime, USD is skyrocketing due to everyone else devaluing against the USD, and also dumping non-USD demoninated investments and buying dollars as a protection from what's about to hit.

I'm not sure what the floor is going to be on PMs, but I'm preparing myself to see an $8xx print at some point in the not distant future. I won't be selling. It's insane, given the amount of QE that's taken place, that it's trading as low as it is today, but you have to accept PMs are the bastard, red-headed step-child asset in the current fiat banking system, and any money pumped their way is going into suppressing prices. We know that CBs are loading up on it, so it won't stay down forever, but I have no doubt at this point it's going to be beaten to death until the very last moments of the reset.

Liftoff will happen, and when it does, it'll be breathtaking, but it'll be due to seeing insane thing happening in fiat valuations and TPTB losing what little control they have left of the financial system.

Aaronson.Jones.Rutherford's picture

Well said. I agree with almost everything. This I disagree with though: "TPTB losing what little control they have left of the financial system". I think the cornering of the PM derivs market & the continued institutional selling from these highs are just a couple of indicators to me that they are preparing for whatever comes & will press the button when they are good & ready. It will be they who pulls the plug. They will have already sold all their treasuries, probably to pension funds & the taxpayer, by they time they fall apart. TPTB will be the main beneficiaries from the collapse. Them & a few of us extremely patient ones. I believe the dollar will collapse eventually, though we may have the NATO v China/ Russia war first. I will be smiling that day.... if I'm alive!

seek's picture

The PM market -- the one we see into -- is tiny, and easily controlled.

All this other stuff is much, much bigger, and if they had control, we wouldn't be reading about it. The fact that they're moving to benefit from a collapse actually supports the notion that they don't have control over things, but are merely parasites taking advantage of situations that present themselves.

Pretty much the entire history of finance since the Fed was created is about them losing control and using more and more tricks to try and recover it. You don't devalue against gold if you're in control of the markets, you don't end Bretton-Woods if you're in control, you don't print trillions of dollars if you're in control. All of those steps look like they're in control, because wow, look at all that power being displayed, but none of them would happen if they actually had control. The market is a living, uncontrollable beast comprised of the collective impulses of 6 billion people. The Fed, et all, are delusional schizophrenics that have cause and effect reversed and think they're god. When the beast turns on them and their spells and mantras work as well on the market at the do on pit bulls, everyone will see their delusion, and that simply accelerates things. Again, the fact that some smart ones position to benefit from this awakening just shows they're smart, not that they have control.

If you've noticed lately, there's a whole lot more questioning of the Fed and CBs in general. Once you spot the wizard behind the curtain it's over, and that's right where we're at.

Professorlocknload's picture

I can only hope you are right, seek. Because I am beginning to lose faith in the ability of markets to correct the errors of Central Planners.

seek's picture

They always do. It may take much longer than anyone imagines, but they do correct.

Now, we have a situation where the planners do everything they can to stop it, and all that does is wind the spring that much tighter.

If you want hope, look at the collapse of the USSR. No one imagined that until it was practically happening.

Elliott Eldrich's picture

"Helicopter $ coming monday"

Oh yeah, like the motherfucking demons who run the Fed would ever DREAM of giving any money at all to the average prole. Dream on, Sparky. The only "helicopter money" that will EVER be deployed is the money that will be lavishly spent on the Banksters and Wall Street. The rest of us can go die in the streets, for all the Fed cares. Fuck those evil Bankster Fed Demons from Hell.

greenskeeper carl's picture

I disagree. It'll happen eventually. Bet on it. There have already been calls for it, under the guise of "QE for the people". Most people will probably use the money to pay off high interest debt, which means they will just give the money to the banks. So, in the end, it will end up being yet another bank bailout, but watch, before this crashes, they will indeed try helicopter money.

Philo Beddoe's picture

How long do you think it would take them to unveil a program like that?  That, and I do not think people would be rushing to pay off debt. More plasma teevees, icrap and grape drink. 

I will take the counter bet. No $ drop for the Sheep. 

Aaronson.Jones.Rutherford's picture

They'll just pay off debt, like the student loans, or change mortgages to lower interest rates if possible, thus fronting up cash to the banks. They'll be able to think of some way to transfer cash to the banks while making people feel like they're getting a dig-out too. There are so many ways to do it but essentially it will just be a direct transfer of taxpayer $ to the banks. People will feel better off though.

currentsea's picture

here in NJ, the average schmuck would use thier "helicopter money" put a down payment on a mercedes SUV lease, to create a facade that replicates wealth, ignoring the fact that their net worth is $300k in the red, AMEX cut them off, and they haven't made a mortgage payment in 3 months.