By Richie Lin.     Photo：Pankaj Mishra

According to a news report released recently, major shipping lines’ profits from January to September 2022 have surpassed the total profits in 2021. The pandemic starting from 2020 really gave shipping lines an opportunity to make great fortunes. However, the tide has changed since US Federal Reserve began increasing the interest rate to suppress the high inflation. When consumers and companies started to realize they have to cut the consumptions and expenditures, it still took 3 months to reflect on the numbers of orders to the factories. Therefore, shipping lines still received bookings to keep profitable even though they began to decrease the rate Since June. But the effects of decreased consumptions and orders gradually show up in the markets after September. Shipping lines drop their rate almost every week since September because they faced the pressure of lack of bookings. But major shipping lines have changed the mindset when they face the downward market because they are all connected with others into three big alliances. They will not wage a cut-throat war to compete against each other for limited bookings. They are united to announce blank sailings for the balance of supply and demand. They can maintain a certain rate level for them to make profits. The 2M alliance of Maersk and MSC has suspended nearly half of its US West Coast services for December. The Ocean Alliance (CMA CGM, COSCO SHIPPING, OOCL, and Evergreen) and THE Alliance (Ocean Network Express, Hapag-Lloyd, HMM, and Yang Ming Lines) have cut overall vessel capacity by 40-50% until Chinese New Year. Since major shipping lines already made enough fortunes, they are not worried about the decreasing rate when there are not many bookings from customers. But for those small shipping lines joining into the long-haul lanes in 2021 and 2022, the situations are totally pessimistic. They jumped into the market when businesses are so good that everybody in the market can make enough profits. But they will be forced out of the market because the business is low and they cannot compete with major players on the services due to they don’t even have stable berthing positions in ports. Therefore, we can see the rate is more stable recently even though the rate is still inclined to decrease. And the blank sailings also create limited space before factories want to ship out their orders before Chines New Year.

FCL market rate reference in week 50:

• Asia main ports to USAWC USD 1700~2200 per 40GP; 
• Asia main ports to USAEC USD 4000~4500 per 40GP;
• Asia main ports for IPI points of USA is USD 4500~5500 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 2500~3500 per 40GP.

Airfreight market rate in Week 50:

Airfreight rate might increase abruptly without further notice. The following market rate for your reference. 

• PVG/SZX/HKG/TPE to LAX USD 4.3/kg,
• PVG/SZX/HKG/TPE to ORD USD 4.4/kg, 
• PVG/SZX/HKG/TPE to JFK USD 5.0/kg.

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