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Ocean Freight Rates Caught in Coronavirus Slump

Drewry’s composite World Container (WCI) index continues its downward trajectory since the first week of February due to the outbreak of coronavirus in China and elsewhere in the world.

The index decreased 3.5 percent for the week ended March 5 and reached $1,485.59 per 40-foot container or equivalent (FEU). The WCI was up 3.1 percent compared to the same period of 2019 in the heart of the U.S.-China trade war.

The average composite index of the WCI, assessed by Drewry for year-to-date, was $1,688 per FEU, which is $304 higher than the five-year average of $1,384 per FEU.

Spot rates from Rotterdam to Shanghai surged 24 percent to reach $786 per FEU and were 45 percent higher compared to a year ago. This huge increase was the effect of empty containers, Drewry noted. Many major carriers, such as Maersk and CMA CGM, said they have conducted “blank sailings” during the COVID-19 crisis in order not to stall global routes.

Freight rates declined 10 percent on the Shanghai to Los Angeles trade lane, putting the index level at $1,327 for an FEU.

“Transatlantic rates do not seem to have any major changes and have remained steady,” Drewry said. “Drewry expects no upturn in rates until the epidemic can be brought under control.”

CMA CGM said this week that manufacturing activity is gradually picking up, more port workers and truck drivers are returning to their posts, and cargo flow is easing up at the major coastal ports.

“In short, business operations have now entered the recovery phase,” the company said.

Ocean Network Express (ONE) said Thursday it has even “resumed accepting bookings to/from all ports in Hubei province, including Wuhan.”

The United Nation Conference on Trade & Development said Wednesday that the coronavirus outbreak is disrupting world trade and could result in a $50 billion decrease in exports across global value chains.