Bulk transport European line main contract plummeted!
Looking back at the trend since the beginning of this year, the main contract of the container index (European line) futures continued to soar from January to July, driven by the dual demand of the market and geopolitical tensions, and the highest increase during the year was more than 278%, reaching a peak of 4763.6 points. Since then, however, the contract has entered a downward channel, and as of the close of September 9, the cumulative decline has been more than 66%.
Behind the slump, analysts pointed out that the main factors include shipping companies constantly adjust freight rates, resulting in depressed market sentiment; The pessimistic sentiment of macroeconomic expectation combined with seasonal recession further aggravates the pessimistic expectation of the market; And fierce price wars waged by shipping companies in response to falling demand for freight.
Specifically, major shipping companies continued to reduce online freight rates in early September, and the transaction price of large containers for some airlines has dropped to about $5,500, while the freight rate of the world's eighth largest container liner company, Hanxin Shipping (HMM), has dropped to $4,982. In addition, shipping giant Maersk also announced that it will reduce the peak season surcharge (for European routes) on September 15, from the original $3,000-4,000 to $1,500-3,000, further opening the downward space of the spot market.
In terms of the European economy, data released by Sentix, a research institute, showed that the investor confidence index in the eurozone fell for a second consecutive month in August to -13.9, the lowest level since January 2024, showing signs of a slowdown in the European economy and dim prospects for future recovery.
From the actual freight rate, the data of the Shanghai Shipping Exchange show that as of September 9, the Shanghai export container settlement freight index (European route) was 4566.27 points, down 10.6% from last week. At the same time, taking the Shanghai to Rotterdam route as an example, the price of 20 foot and 40 foot containers has decreased significantly, of which the price of 20 foot containers has decreased by $600 to $2,696, and the price of 40 foot containers has decreased by $1,400 to $3,400, which is a considerable decrease.
On the whole, the obvious weakening of demand in the consolidated transportation market is the main reason for the accelerated decline in spot freight rates. With the arrival of the cargo off-season, shipping companies are facing huge pressure to solicit goods and fill tanks, in order to compete for market share, they have to cut prices to attract customers, which has led to fierce competition and price wars in the market.
With the increasing expectation of economic recession, the market's lack of confidence in future demand, shipping companies have lowered freight rates, and the geopolitical situation has weakened support, and the recent month contract of the European consolidation line has continued to operate under pressure. In the short term, the market generally believes that the bearish trend is more difficult to reverse, and the probability of downward volatility of the futures price is still large, but under the influence of the geopolitical disturbance and the centralized shipment demand before the end of the year, EC2412 may rebound in the short term after falling to a low level; In addition, since the far contract has been accounted for in advance of the decline of pessimistic expectations, the downside is expected to be limited and the rebound momentum is stronger under the bullish disturbance.
Analysts pointed out that the continued decline of the main contract of the container index (European line) futures is mainly attributed to two core driving forces:
Weak market demand and freight rate reduction: the demand of the consolidation market has weakened significantly, which has directly led to the accelerated decline in spot freight rates. With the reduction of freight demand, shipping companies face greater pressure to solicit goods and fill tanks, and then have to deal with the price reduction strategy, which further aggravates the downward pressure on market prices.
Geopolitical easing expectations: The recent mass demonstrations in Israel and the strong call for a ceasefire agreement with Hamas have significantly raised market expectations for a geopolitical easing. Such expectations not only increase market uncertainty, but also indirectly affect the container market, as the easing of geopolitical tensions is often accompanied by a resumption of trade activity and a reduction in logistics costs, thus further boosting bear sentiment.
The container futures market will face multiple pressures. On the one hand, the market supply and demand imbalance and the internal factors of rapid decline in freight rates will continue to exist, putting direct pressure on market prices; On the other hand, external factors such as changes in the geopolitical situation will also continue to disturb the market, increasing market volatility and uncertainty.
Future outlook of shipping market
At present, shipping prices have fallen to a relatively low level, and the market is expected to continue to shake down, but with the possibility of stage stabilization and rebound. The expectation of a recession in the United States strengthens the bearish trend, the market is pessimistic, and the time to buy the bottom needs to wait for the overall market recovery. The situation in the Middle East and the adjustment of shipping companies' strategies may lead to a short-term rebound, and the overall trend is still downward. Recent data shows that shipping capacity has been adjusted, capacity in September was reduced, October due to holiday suspension increased, is expected to maintain stability during the Golden Week freight rates. At the same time, the US-East labor negotiation impasse increases the risk of port congestion, and the impact on the European line capacity remains to be observed, adding uncertainty to the market in October.
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