International Container Shipping Rates See Significant Drop

From the beginning of the year to early July, the surge in ocean freight rates, congestion at some Asian ports, and a shortage of empty containers had a significant impact on Vietnam’s import and export activities. However, by mid-August 2024, the Vietnam Maritime Administration reported a sharp decline in international container shipping rates, bringing positive signals to domestic shippers.

Ocean Freight Rates Decline

According to the Vietnam Maritime Administration, compared to the previous month, freight rates had decreased across all routes by mid-August, with the most significant drops observed on the Asia-West Coast of North America and Europe routes (approximately 20-30%). Rates on other shipping routes also decreased by about 15-25%.

Currently, the rates are 44% lower than the peak during the pandemic (September 2021) and are expected to continue declining in the near future.

On average, freight rates have been decreasing by about 3-4% per week compared to the previous week. It is forecasted that freight rates will continue to decrease due to several positive factors from the market and the resolution of congestion at major ports.

Some of the reasons for the cooling of freight rates include the alleviation of port congestion in several countries, leading to shorter waiting times for vessels. For example, in Singapore, the waiting time for ships has decreased from 7-10 days to only 2 days.

Additionally, the volume of goods from China to the US has not increased as much as before, resulting in a more abundant supply of vessels and empty containers.

“Due to the above reasons, freight rates have decreased significantly within a month, and are expected to continue declining in the near future,” the Maritime Administration forecasts.

Freight rates had decreased across all routes by mid-August

From the beginning of the year, international container shipping rates had surged, especially on long-haul shipping routes.

According to the container rate index of Drewry (an independent maritime research center providing information on the shipping market), container shipping rates from Asia to Europe and the Americas began to rise again in early 2024, peaking at the end of January.

In February, freight rates gradually decreased and reached their lowest point on April 25th, at which time rates decreased by 32% compared to January.

In May, rates increased rapidly again, peaking in early July, when they were about 48% higher than in January and 57% of the peak rate during the pandemic (September 2021).

Container shipping rates from Asia to Europe and the Americas experienced the largest increase, while the opposite direction from Europe and the Americas to Asia was only about 15-30% of the outbound rates.

Decreasing Freight Rates, Increasing Cargo Volume

The Maritime Administration also made a positive assessment that while freight rates are declining, cargo volume shows signs of significant growth.

As evidence, the Vietnam Maritime Administration reported that the volume of goods through Vietnamese seaports in the past 7 months reached nearly 500 million tons, an increase of 15% compared to the same period in 2023. Of which, containerized cargo reached 16.9 million TEUs, an increase of 21%, and import-export containers reached 10.8 million TEUs, an increase of 16.6%.

Thi Vai International Port (TVP) – A deep-water general port

Specifically, in the Cai Mep – Thi Vai deep-water port area, the volume of import-export containers in the first 7 months reached 3.329 million TEUs, an increase of 38.4% compared to 2023. The Lach Huyen port area also saw an increase in container cargo volume, reaching 954,84 thousand TEUs, an increase of 53%.

Although freight rates have decreased, given the unpredictable fluctuations of the market, the Vietnam Maritime Administration continues to advise businesses to closely monitor global ocean freight rate trends in order to have timely solutions in case of adverse market fluctuations.

Leave a Reply