Falling Freight Rates Bring New Opportunities for UK Importers
Shipping containers from China have seen a major shift over the course of 2022. Freight rates from China to many regions of Europe, like the UK, have fallen by up to two-thirds. The inflated freight rates of recent years have begun to relax, and local importers are already celebrating as their costs dissipate. Except, it seems that many of the biggest shipping giants have been slow on the draw, leaving much of the industry scrambling to capitalise on the moment out of fear right in the middle of a historically volatile cycle.
In this article, the reasons for this — and how a UK importer can take advantage of them — will be explored.
WHAT, WHERE AND WHEN
The prices for routes between China and northern Europe saw a decline back in January, something that has generally attributed to inflation concerns. As of November 2022, a 40ft shipping container bound for Europe dropped in price by two-thirds, on both a year-to-date and 12-month basis, to only a little over £4,000 — but this is still around three-and-a-half times higher than pre-pandemic prices. Nonetheless, analysts speculate this price is still falling towards pre-pandemic levels — and may even have farther to drop.
The theory is relatively simple: falling demand over the last year has led to a decline in the volume of goods being shipped, while at the same time, the huge congestion issues that have clogged many major ports worldwide have massively eased. This has freed up a great deal more vessels, leading to a fall in the used capacity and, thus, a drop in expected shipping delays. Of course, inevitably, there will be a rush to make sure that this vacuum is filled – and that means falling rates.
THE UK AND BEYOND
Falling rates mean rising demand, and only now is the cycle coming back around. While it can be expected for China to UK freight rates to remain low for some time, shipping companies are always looking to capitalise on any growing demand. Container lines remain on track to record huge profits this year and armed with excess capital, shipping lines have gone on a buying spree, ordering scores of new vessels. As a result, capacity is expected to expand significantly going into 2023. While the issue is most commonly discussed in the context of the US, this shift is sure to be another radical change that European markets, including the UK market, must adapt to.
All in all, current trends offer a wide range of opportunities for UK importers; those who are well informed of the changing market will be able to take the best advantage of it. Low freight rates can be great while they last, but now is a good time to keep a close eye on the latest freight news for any major changes.
ABOUT UNEEK GROUP
Wondering where all this leaves you? Thankfully, Uneek Group has got you covered. At Uneek Group, we have unprecedented experience in importing and freight forwarding.
Email: [email protected]
Phone: +44 (0) 20 8984 0425
Uneek Forwarding is part of the Uneek Group Ltd.