With rates dropping by 30-40 percent, container lines tell exporters things are easing out

“Basically, all the cargo that had to be shipped for the Christmas season shopping in the West has been shipped. Now, there is less cargo. When there is less cargo, it is easy to get space on ships and freight rates automatically are coming down,” the executive said.

“The Container Shipping Lines Association (CSLA) made it very clear that freight rates are dropping, and it is expected to drop further, especially on the Europe sector. But to the US, there is a chance of rates probably holding up because of the impending strike by the longshoremen from 1 October. This may create an artificial supply chain crisis. So, rates to the U.S. probably might go up. Already, it has started coming down but in case the longshoremen strike comes through and there are going to be ships waiting for berthing, containers getting stuck on vessels, problems in inter-modal connectivity, resulting in equipment shortages and disruption in the supply chain, then there will be a chance that freight rates will go up,” the executive said.

“Everyone is asking for immediate resolution of the issues facing the exporters. There is no immediate solution for all these things. The situation is coming back to normalcy; it is not like complete normalcy but don’t bring any isolated incidents to say that someone did not get a container or freight rate was high. Things are easing out,” he stated.

The coming months is not going to be easy either for the trade and the container shipping industry with “too many uncertainties” to contend with. But the biggest factor that may tip the scales in favour of the trade is that new container ships with a cumulative capacity to load some 2.4 million TEUs will hit the water sometime next year, exerting a downward pressure on the rates.

Shipping industry says that some carriers would have gone out of business if the Houthi attacks had not happened. “Houthi’s have given all the container shipping lines a second lease of life. The first lease of life was the pandemic, there the lines made tons of money. After that, if you look from early 2023 onwards, freight rates were falling like dominos. Every week it was just going down. In the latter part of 2023, when the Houthi’s started attacks, lines started rerouting their vessels through the Cape of Good Hope, and the freight rates started to improve,” the second executive added.