The Drewry’s World Container Index (WCI) ended just about 0.5% lower for the week at US$1,710, still looming below the Christmas-2019 mark, though not at a post-pandemic low yet.
While this is its second-best weekly performance in over a year, despite featuring in the red, it has had a mixed performance in March. While the index lost about 9.6% for the month and about 19% this quarter, this was still its worst monthly performance for the quarter with both January and February of 2023, seeing a lesser magnitude of declines.
However, a comparison with March 2018 and March 2019, in the pre-pandemic phase where the rates were in a comparable territory with today actually reveals a better outlook for the spot rates.
March 2018 saw a 22% dip in rates while March-2019 saw an 18% decline. This comparison despite having a higher base in 2023, further connected and compared with the performances of other spot rate indices indicates that the month was better off conventionally, with this phase posing a brief lull representing the pre-Easter and pre-summer phases.
The near-stable rates this week propelled on the back of a weekly spurt in the China- Europe numbers and an arrest in the China-US East Coast rates would be an interesting juncture for the market. Drewry’s themselves have revised their commentary that says “East-West spot rates on routes other than the transatlantic to plateau in the next few weeks” from the earlier commentary mentioning small week-on-week declines.
At the macro level, signals points of certain looms and booms. While the Chinese exports were reported to have fallen by 1.2% in February 2023 on top of a marginal dip in the manufacturing numbers, the growth forecasts for the region have been revised upwards from 4.7%-5% to 5.6%-6.5%, with the recent growth witnessed in the services segment to coming to the party.
A reported dip in the European Union (EU) inflation to 8.5% is reportedly good from a consumption point of view. With a flurry of new container ships hitting the water and with revisions in contract rates set to come in, it will be an interesting quarter for the shipping world to understand the way rates are headed.
Author of the article: Gautham Krishnan
Gautham Krishnan is a logistics professional with Fluor Corporation, in the area of project logistics and analytics, and has worked in the areas of Project Management, Business Development and Government Consulting
