Amidst the Post Covid-19 developments in the trucking industry, spot truckload rates have joined in the trend. SHIFEX by Shifl, a container spot freight index, has shown a progressive decline in the spot rate. This decline is expected to crash shipping rates which have been high since the pandemic.
According to Shifl’s data, the shipping rate for a 40-foot container from China to the US is likely to crash. The price for shipping the container is forecasted to fall below $5, 000, which is the lowest price since the post-pandemic spike.
Suspected Cause Of The Drop In Spot Truckload Rates
Although several countries have returned to their normal industrial activities, this is not so in China. The country which has continually suffered from deadlier variants of the virus decided to restrict movements. As a result, different parts of the country are under partial or total lockdown.
Currently the virus is under control however, the trucking industry is experiencing the effects of the lockdown. Consequent to the lockdown, industrial activities within China and the US have dropped notably. This has given the US West coast ports enough time to recover from the port congestion that resulted from the pandemic.
Container Spot Truckload Rate Drops
Shipping a 40` container from China to Los Angeles and Long Beach is predicted to cost an average of $4,900. This projection is to take effect in September 2022. However, it is important to know that this will be a 72% reduction from the price costs of September 2021. As of September 2021, shipping the same size of container costs USD 17,500.
Amidst the spot truckload rates drop, the CEO and founder of Shifl, has put in a word about his thoughts. Shabsie Levy mentioned the fact that the prices were dropping rapidly. He stated that the rates are now lower than they were at the beginning of 2022. He also pointed attention to the fact that consumer demand was very high at the start of the year.
However, during his talk, he also referred to the way things were before the lockdown. He mentioned that the continued spot truckload rates decline possibly shows that the market is tending towards a new normal. But even at that, Shabsie made it clear that the prices are still three times higher than they were before the lockdown.
How US Carriers Deal With The Spot Truckload Rates Decline In The US Ports
Shabsie Levy predicts that carriers will be forced to renegotiate long-term contracts that were set at high levels. While some top US carriers have been able to manage the current container spot rates drop, negotiations have started for others.
Container Lines mentions that they were able to brush off the 23rd straight week spot freight rates decline. Consequently, they lifted their earnings outlook and profits forecast for 2022. Currently, despite the drop in spot freight rates, contract rates are still 60% higher than in 2021. Based on this, carriers still have the upper hand amidst the continuous price drop.
On the other hand container shipping companies such as Lines, Maersk, and One mentioned that they recorded a volume decline in the second quarter. Consequently, the three companies have now focused on their multi-year contracts. These contracts are currently responsible for 70% of the container moves of these companies.
Let Metti International Help You Ship Your Car
Despite the spot truckload rates decline, Metti International is committed to taking the stress of you on your car shipping. We use only carriers with 95% or higher service ratings. This is to ensure your car is delivered safely, securely and promptly.
If you need a trusted and reliable car shipping company, contact Metti International today. You can reach us at 866.620.1776 or request a quote online.
We look forward to serving you!