(Yicai Global) Sept. 8 -- Ocean freight charges from China to the United States and Europe are dropping as demand falls due to high inflation rates in those regions.

Since January, rates on routes between China and East Asia to the US west coast are down about 60 percent at USD4,787 per forty-foot-equivalent unit as of yesterday, according to the Baltic Exchange’s freight index. Rates from China to northern Europe have fallen 42 percent to USD9,128.

Smaller volumes are the main reason, said Luo Jie, a shipping expert who has been working in the sector for over two decades.

Export volumes are still lower than a year ago despite an upturn since early 2022, according to Wang Song, who is in charge of DHLink, a logistics arm of cross-border marketplace DHgate.Com. Volumes could slump 30 percent this year, he added.

Rates are likely to fall through this year and next, according to analysts, also in part because of added capacity as new vessels take to the water over the next two years. Fleet sizes are expected to increase next year and in 2024 by more than 9 percent.

But marine shipment fees are not expected to go as low as before the pandemic. The days of TEU units costing as little as USD1,000 are over, according to industry insiders, because shippers are shouldering higher fuel costs and investing in low-emissions technologies. 

Cargo shipments usually climbs after the Chinese New Year early in the year, but this year that has not happened, Luo said, adding that the issue lies not with supply, but with demand in the US.

Slumping rates and plunging demand in the third quarter are a result of slowing consumer spending abroad amid high inflation, said Daejin Lee, lead shipping analyst for S&P Global Market Intelligence. Demand should gradually pickup after this quarter, he added.

Editors: Liao Shumin, Emmi Laine, Xiao Yi