Shipping rates hit multi year low 📉👀

OCEAN RATES

Ocean rates hit multi-year low

Trans-Atlantic shipping rates have experienced a significant decline, with various index providers presenting slightly different figures, but all confirming a substantial drop below pre-pandemic levels. According to the Drewry World Container Index (WCI), rates for shipments from Rotterdam to New York reached a peak of $7,426 per forty-foot equivalent unit (FEU) in November 2022. However, by the latest recorded week, these rates plummeted by 79% to $1,577 per FEU. The current WCI assessment not only stands 20% below 2018 levels but also 33% below those of 2019, before the pandemic. Remarkably, these rates are the lowest in at least 12 years, as indicated by Drewry's data.

Similarly, the Freightos Baltic Daily Index (FBX) revealed a peak of $10,708 per FEU for Europe-East Coast spot assessments in June 2022. By the most recent data, this figure collapsed by 88% to $1,236 per FEU. Notably, trans-Atlantic westbound rates have consistently been beneath pre-COVID levels since June, remaining 29% lower than those of 2019.

Xeneta's tracking of both short-term (spot) and long-term (contract) rates underscores the trend of falling spot rates in the North Europe-East Coast lane. While average spot rates stood at $1,510 per FEU as of the recent assessment, they had plunged 83% from the peak of $8,793 per FEU in mid-May 2022 and were down 35% compared to rates at this point in 2019.

Interestingly, the Trans-Pacific route presents a contrasting scenario. In that region, spot rates have surged above contract rates, a dynamic opposite to the Trans-Atlantic situation. In essence, the Trans-Atlantic shipping sector is grappling with a sharp decline in rates, evident across various index providers, as rates drop substantially below pre-pandemic norms, casting a spotlight on the evolving market dynamics.

VIDEO OF THE WEEK

How a square box changed world trade

Each year more then 4 trillion dollars worth of goods are transported by the humble shipping container. But how did it work before the container was invented? This video summarizes the beginnings of the shipping container, the key players and the impact this remarkable invention has had on globe.

TRADE NEWS

Africa’s potential as supply chain leader

Africa's growing influence in global supply chains is fueled by its abundant resources and expanding consumer base, positioning it as a key player in producing goods and contributing to the worldwide supply chain network.

The UNCTAD 2023 report on Africa identifies seven pivotal factors that underscore this trend:

1. Resource Wealth: Africa's significant reserves of critical minerals like aluminum, cobalt, copper, lithium, and manganese are vital for technology products. Amid trade fluctuations and economic uncertainties, businesses are diversifying production locations, aligning with Africa's resource strengths.

2. Emerging Industries and Job Opportunities: Evolving industries mean more jobs and economic growth. With a youthful population and growing demand for better living standards, businesses can cater to these needs and drive economic progress.

3. Global Integration: Deeper integration into supply chains broadens Africa's economic horizons and bolsters resilience against future disruptions. This integration has the potential to improve wages and living standards across the continent.

4. Solar Energy Potential: Africa's abundant sunshine offers a significant source of renewable energy. Exploiting this potential reduces production costs and promotes environmentally conscious practices by reducing fossil fuel dependence.

5. Infrastructure, Technology, and Support: Unleashing supply chain potential requires infrastructure investments and digital technology integration. This enhances processes and global competitiveness.

6. Local Industry Empowerment: By securing favorable mining contracts and exploration licenses for vital tech-related minerals, African nations can amplify their supply chain involvement, empowering domestic industries.

7. Supply Chain Finance and Flexibility: Addressing barriers to supply chain finance and providing debt relief are essential. This empowers African countries to strengthen their supply chains, considering higher borrowing costs in Africa compared to other economies.

In summary, Africa's ascent as a global supply chain contender gains momentum through resource utilization, emerging industries, international collaboration, and infrastructure investment. This positions the continent at the forefront of the global economic landscape.

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